Demand & Supply

📘 NDA Economics · ECN02

Demand & Supply for NDA is basic NCERT — just the laws and their determinants. Direct questions, no deep analysis. Learn the inverse/direct relationships and the key shift factors.

📌 NDA Pattern: Law of Demand (inverse) • Determinants of demand • Law of Supply (direct) • Equilibrium concept • Substitutes vs Complements

1. Law of Demand & Supply

Law of Demand: Price ↑ → Quantity Demanded ↓ (Inverse relationship). Ceteris paribus. Demand curve = downward sloping.
Determinants (Shift Factors): Income • Tastes • Price of related goods (substitutes: tea&coffee; complements: car&petrol) • Expectations.
Normal Good: Income ↑ → Demand ↑. Inferior Good: Income ↑ → Demand ↓.
Law of Supply: Price ↑ → Quantity Supplied ↑ (Direct relationship). Supply curve = upward sloping.
Market Equilibrium: Where demand = supply. At equilibrium price, no surplus, no shortage.

📌 NDA Trap: Movement along demand curve = price change. Shift of demand curve = non-price factor change. NDA asks which type of change is shown when income rises.

📝 NDA PYQDemand & Supply — NDA Pattern

Q1. The Law of Demand states that, ceteris paribus: (NDA I 2024)

(a) Price and quantity demanded move in same direction (b) Price and quantity demanded move in opposite directions (c) Supply determines demand (d) Demand is unaffected by price

Answer: (b) Price and quantity demanded move in opposite directions (inverse relationship)
As price rises, quantity demanded falls; as price falls, quantity demanded rises. “Ceteris paribus” = all other factors held constant. This is the foundational law of economics tested in every NDA paper.

Q2. Tea and coffee are examples of: (NDA II 2023)

(a) Complementary goods (b) Inferior goods (c) Substitute goods (d) Giffen goods

Answer: (c) Substitute goods
Substitutes serve similar purposes. If tea price rises, people switch to coffee → coffee demand rises. Complements (e.g., petrol and car): used together; price of one rises → demand for both falls.

📝 Rapid Revision — ECN02

📊 Key Laws

Demand: Price up → Qty down (inverse)
Supply: Price up → Qty up (direct)
Equilibrium: D=S; no surplus/shortage
Normal good: income up → demand up

🍽 Related Goods

Substitutes: price of A up → demand for B up (tea+coffee)
Complements: price of A up → demand for B down (car+petrol)
Inferior: income up → demand DOWN

📝 Mock Tests 🎯 Economics Quiz ✈️ Telegram