CAT GD/PI 2016 Preparation | Economics #3

By N Shiva Guru|Updated : December 21st, 2016

Hello wonderful CAT 2016 Aspirants,this is part of a series of posts for your GD/PI preparation. In case you missed the first two posts, here are the links to those: Post 1, Post 2. Hope this is proving fruitful for you. In case you need more GD/PI tips, please don't hesitate to leave them as a comment. Cheers!

Quantity Demanded: Future Expectations

This post contains the reactions of people vis-a-vis the quantity demanded in the face of future expectations. As we have been discussing the fluctuation of Quantity Demanded for Mobile Phones whose prices constantly go down, today we shall see how people react (read Quantity Demanded) when the Future Prices are expected to fall.

Illustration: Let's say you're an iPhone fan but your budget is 20,000. Initially, iPhone 5 was 27,000 but now it is possibly around 20,000. So, all that you would have needed to do is to wait so that the prices would come down.( This is of course assuming that you're okay with not having additional features and the like which happens to be there in the more expensive models of the iPhone.) 

The table below and the accompanying graph are shown for Mi Phones (for example) in that particular price range.  

 Scenario PriceQuantity Supplied
 A 10,00060,000
 B 12,000 40,000
 C 18,000 30,000
 D20,000 25,000
 E 22,000 23,000

As you can observe, the graph has shifted to the left. 

byjusexamprep

Quantity Supplied: Future Expectations

Let's take the same example as above: Mobile Phones and you know that you would have to reduce the prices or you are expecting a dip in the prices in the near future. So, as a seller you would push as many mobiles as possible into the market. The table and the accompanying graph show what would happen. 

 ScenarioPriceQuantity Supplied
 A 1000 10,000
 B 2000 15,000
 C 3000 18,000
 D 4000 20,000
 E 5000 24,000

The curve shifts to the right. 

byjusexamprep

Hope this column has helped you and is helping you. In case of any feedback whatsoever, please leave a message in the comment section. Cheers!!

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