Supply and Demand · One-liners

1 A — Price (₹/kg) / Quantity Demanded (kg)?

Price (₹/kg): 500; Quantity Demanded (kg): 9

2 B — Price (₹/kg) / Quantity Demanded (kg)?

Price (₹/kg): 400; Quantity Demanded (kg): 10

3 C — Price (₹/kg) / Quantity Demanded (kg)?

Price (₹/kg): 300; Quantity Demanded (kg): 12

4 D — Price (₹/kg) / Quantity Demanded (kg)?

Price (₹/kg): 200; Quantity Demanded (kg): 15

5 E — Price (₹/kg) / Quantity Demanded (kg)?

Price (₹/kg): 100; Quantity Demanded (kg): 20

6 Movement Along (Change in Quantity Demanded) — Cause / What happens on the diagram?

Cause: Change in own price of the good only; What happens on the diagram: Slide from one point to another on the same curve

7 Extension — Cause / What happens on the diagram?

Cause: Fall in own price; What happens on the diagram: Movement downward-rightward on the same curve

8 Contraction — Cause / What happens on the diagram?

Cause: Rise in own price; What happens on the diagram: Movement upward-leftward on the same curve

9 Shift of the Curve (Change in Demand) — Cause / What happens on the diagram?

Cause: Change in non-price factors — income, tastes, related-good prices, expectations, population; What happens on the diagram: Whole curve shifts left (decrease) or right (increase)

10 Increase in Demand — Cause / What happens on the diagram?

Cause: Higher income for normal good, price of substitute up, price of complement down, favourable taste, expectations of price rise; What happens on the diagram: Rightward shift (D D₁)

11 Decrease in Demand — Cause / What happens on the diagram?

Cause: Lower income for normal good, price of substitute down, price of complement up, unfavourable taste, expectations of price fall; What happens on the diagram: Leftward shift (D D₂)

12 Perfectly Elastic — details?

\; : Ep \; : = ∞; : Horizontal demand curve. Any rise in price quantity demanded falls to zero. Idealised perfectly-competitive single firm.

13 Perfectly Inelastic — details?

\; : Ep \; : = 0; : Vertical demand curve. Quantity demanded does not change at all even if price changes. Life-saving insulin for an individual diabetic.

14 Unit Elastic — details?

\; : Ep \; : = 1; : Rectangular hyperbola. % ΔQ = % ΔP exactly. Total expenditure stays constant.

15 Relatively Elastic — details?

\; : Ep \; : > 1; : Flatter curve. Luxury goods, fashion items. Small price change big quantity change.

16 Relatively Inelastic — details?

\; : Ep \; : < 1; : Steeper curve. Necessities — salt, electricity, kerosene. Big price change small quantity change.

17 Ey > 0 — Type of Good / Example?

Type of Good: Normal good; Example: Clothes, restaurants, branded apparel

18 Ey > 1 — Type of Good / Example?

Type of Good: Luxury / Superior good; Example: Cars, jewellery, international travel

19 0 < Ey < 1 — Type of Good / Example?

Type of Good: Necessity (normal but inelastic); Example: Food grains, salt, electricity

20 Ey < 0 — Type of Good / Example?

Type of Good: Inferior good; Example: Coarse cereals, bidi, low-quality public transport

21 Ey = 0 — Type of Good / Example?

Type of Good: Zero elasticity; Example: Pure necessities (salt)

22 Exy > 0 — Type / Example?

Type: Substitutes; Example: Tea & Coffee, Pepsi & Coke, Bus & Metro

23 Exy < 0 — Type / Example?

Type: Complements; Example: Car & Petrol, Bread & Butter, Smartphone & Data

24 Exy = 0 — Type / Example?

Type: Unrelated; Example: Salt & Cars

25 A — Price (₹/kg) / Quantity Supplied (kg)?

Price (₹/kg): 500; Quantity Supplied (kg): 18

26 B — Price (₹/kg) / Quantity Supplied (kg)?

Price (₹/kg): 400; Quantity Supplied (kg): 16

27 C — Price (₹/kg) / Quantity Supplied (kg)?

Price (₹/kg): 300; Quantity Supplied (kg): 12

28 D — Price (₹/kg) / Quantity Supplied (kg)?

Price (₹/kg): 200; Quantity Supplied (kg): 7

29 E — Price (₹/kg) / Quantity Supplied (kg)?

Price (₹/kg): 100; Quantity Supplied (kg): 0

30 Perfectly Elastic — Value / Curve / Example?

Value: Es = ∞; Curve / Example: Horizontal. Hypothetical. Any tiny price rise infinite supply.

31 Perfectly Inelastic — Value / Curve / Example?

Value: Es = 0; Curve / Example: Vertical. Fixed supply — land, vintage car, antiques, very-short-run output.

32 Unit Elastic — Value / Curve / Example?

Value: Es = 1; Curve / Example: Straight line through origin.

33 Relatively Elastic — Value / Curve / Example?

Value: Es > 1; Curve / Example: Flatter. Manufactured goods with spare capacity.

34 Relatively Inelastic — Value / Curve / Example?

Value: Es < 1; Curve / Example: Steeper. Agricultural goods in short-run.

35 500 — Qd (kg) / Qs (kg) / State of Market / Pressure on Price?

Qd (kg): 9; Qs (kg): 18; State of Market: Surplus; Pressure on Price: Downward

36 400 — Qd (kg) / Qs (kg) / State of Market / Pressure on Price?

Qd (kg): 10; Qs (kg): 16; State of Market: Surplus; Pressure on Price: Downward

37 300 — Qd (kg) / Qs (kg) / State of Market / Pressure on Price?

Qd (kg): 12; Qs (kg): 12; State of Market: Equilibrium; Pressure on Price: Neutral

38 200 — Qd (kg) / Qs (kg) / State of Market / Pressure on Price?

Qd (kg): 15; Qs (kg): 7; State of Market: Shortage; Pressure on Price: Upward

39 100 — Qd (kg) / Qs (kg) / State of Market / Pressure on Price?

Qd (kg): 20; Qs (kg): 0; State of Market: Shortage; Pressure on Price: Upward

40 Demand (D D₁), Supply unchanged — Effect on P / Effect on Q?

Effect on P: Rises; Effect on Q: Rises

41 Demand (D D₂), Supply unchanged — Effect on P / Effect on Q?

Effect on P: Falls; Effect on Q: Falls

42 Supply (S S₁), Demand unchanged — Effect on P / Effect on Q?

Effect on P: Falls; Effect on Q: Rises

43 Supply (S S₂), Demand unchanged — Effect on P / Effect on Q?

Effect on P: Rises; Effect on Q: Falls

44 Both (D , S ) — Effect on P / Effect on Q?

Effect on P: Indeterminate (depends on relative shift); Effect on Q: Rises

45 Both (D , S ) — Effect on P / Effect on Q?

Effect on P: Indeterminate; Effect on Q: Falls

46 D , S — Effect on P / Effect on Q?

Effect on P: Rises; Effect on Q: Indeterminate

47 D , S — Effect on P / Effect on Q?

Effect on P: Falls; Effect on Q: Indeterminate

48 Demand?

Quantity bought at a price, in a period; need desire + ability + willingness

49 Determinants?

P-I-R-T-E-N (Price, Income, Related, Tastes, Expectations, Number)

50 Law of Demand?

Inverse P-Q; ceteris paribus; downward-sloping curve

51 Movement vs Shift?

OWN price movement; OTHER factors shift

52 Exceptions?

V-G-N-E-I-S (Veblen, Giffen, Necessities, Expectations, Ignorance, Speculative)

53 PED?

Five degrees ∞ / 0 / 1 / >1 / <1; point & arc methods

54 IED?

Normal (+), Luxury (>1), Necessity (0-1), Inferior (−)

55 XED?

Substitute (+), Complement (−), Unrelated (0)

56 Supply?

Direct P-Q; upward-sloping curve; P-F-T-T-S-E-G-W-N shifters

57 PES?

Higher in long-run; lower in short-run; 0 for vintage / agricultural-market period

58 Equilibrium?

Qd = Qs at P*; market-clearing

59 Shift effects?

Same direction Q certain, P indeterminate; opposite P certain, Q indeterminate

60 Ceiling / Floor?

Ceiling below P shortage; Floor (MSP) above P surplus

61 Tax incidence?

Inelastic side bears more

62 Surplus?

CS = ½ Q(Pmax − P); PS = ½ Q(P − Pmin)

63 Banking link?

Credit demand i-elastic; deposit supply rate-sensitive; loanable-funds equilibrium = real interest rate

64 (True/False) Demand = desire + ability to pay + willingness to pay, at a given price and time?

TRUE — .

65 (True/False) The Law of Demand holds only under the ceteris paribus assumption — no change in income, related-good prices, tastes, expectations or population?

TRUE — .

66 (True/False) A change in the own price of a good causes the demand curve to shift?

FALSE — own-price change causes a movement along the curve (extension/contraction); only non-price factors shift the curve.

67 (True/False) The demand curve for a Giffen good slopes upward?

TRUE — Giffen and Veblen goods are textbook exceptions to the Law of Demand.

68 (True/False) All Giffen goods are inferior, but not all inferior goods are Giffen?

TRUE — .

69 (True/False) Veblen goods become more valuable in the eyes of the consumer as their price rises, hence demand rises with price?

TRUE — .

70 (True/False) Price elasticity of demand is always positive?

FALSE — PED is negative under the Law of Demand. Only its absolute value is reported in magnitude classification.

71 (True/False) Income elasticity of demand for an inferior good is negative?

TRUE — .

72 (True/False) Cross elasticity of demand is positive for substitutes and negative for complements?

TRUE — .

73 (True/False) Price elasticity of supply of perishable agricultural produce after harvest is generally very high?

FALSE — once harvested, the supply is fixed for the season very low (often near zero) elasticity in the market period.

74 (True/False) At market equilibrium, Qd = Qs and there is no tendency for price to change?

TRUE — .

75 (True/False) If a price ceiling is set above the equilibrium price, it creates a shortage?

FALSE — a ceiling above the equilibrium is non-binding (no effect). Shortages arise only when the ceiling is below equilibrium.

76 (True/False) The Minimum Support Price (MSP) announced by the GoI on CACP's recommendation is a price floor — it creates a surplus when set above the market-clearing price, which the government…?

TRUE — .

77 (True/False) The MSP for Common Paddy (Kharif 2025-26) is ₹2,369/qtl as approved by the CCEA on 28 May 2025?

TRUE — .

78 (True/False) The RBI repo rate as on June 2026 stands at 5.50 % and the MPC stance is neutral?

TRUE — .

79 (True/False) Consumer surplus is the area above the demand curve and below the equilibrium price?

FALSE — Consumer surplus is the area below the demand curve and above the equilibrium price (the gap between willingness to pay and actual price paid).

80 (True/False) When the demand curve shifts rightward with supply unchanged, both equilibrium price and equilibrium quantity rise?

TRUE — .

81 (True/False) Tax incidence falls more on the side of the market that is more elastic?

FALSE — burden falls more on the side that is more INELASTIC (cannot easily change quantity in response to price).

82 (True/False) Bank credit demand is more interest-rate-elastic in the long-run than in the short-run, because firms can postpone or advance investment decisions over a longer horizon?

TRUE — .

83 (True/False) GST rationalisation to two main slabs of 5 % and 18 % with effect from 22 September 2025 acts as a positive demand-shock (rightward shift of the aggregate demand curve) — a Diwali-eve…?

TRUE — .

84 Demand Function — Expression / Used For?

Expression: Qd = f (Px, Y, Pr, T, E, N); Used For: Determinants of demand

85 Law of Demand — Expression / Used For?

Expression: dQd/dPx < 0 (ceteris paribus); Used For: Inverse own-price relation

86 Market Demand — Expression / Used For?

Expression: QdM = Σ Qdᵢ over all consumers; Used For: Horizontal sum of individual demands

87 PED — Point Method — Expression / Used For?

Expression: Ep = (ΔQ/ΔP) × (P/Q); Used For: Demand responsiveness to own price

88 PED — Arc / Midpoint Method — Expression / Used For?

Expression: Ep (arc) = [ΔQ / ((Q₁+Q₂)/2)] ÷ [ΔP / ((P₁+P₂)/2)]; Used For: Used for large discrete changes

89 Total Expenditure Test — Expression / Used For?

Expression: If P and TE inelastic; TE unchanged unit; TE elastic; Used For: Quick classification of PED

90 Income Elasticity (IED / YED) — Expression / Used For?

Expression: Ey = (ΔQd/ΔY) × (Y/Q); Used For: Normal / inferior / luxury / necessity

91 Cross Elasticity (XED) — Expression / Used For?

Expression: Exy = (ΔQx/ΔPy) × (Py/Qx); Used For: Substitute (+) / complement (−)

92 Supply Function — Expression / Used For?

Expression: Qs = g (Px, Pf, Tec, T, S, E, G, Cli, N); Used For: Determinants of supply

93 Law of Supply — Expression / Used For?

Expression: dQs/dPx > 0 (ceteris paribus); Used For: Direct own-price relation

94 PES — Point Method — Expression / Used For?

Expression: Es = (ΔQs/ΔP) × (P/Qs); Used For: Supply responsiveness to price

95 PES — Arc Method — Expression / Used For?

Expression: Es (arc) = [ΔQs / ((Qs₁+Qs₂)/2)] ÷ [ΔP / ((P₁+P₂)/2)]; Used For: Large discrete changes

96 Equilibrium Condition — Expression / Used For?

Expression: Qd = Qs solve for P\, Q\; Used For: Market-clearing price & quantity

97 Consumer Surplus (Linear) — Expression / Used For?

Expression: CS = ½ × Q\ × (P_max − P\); Used For: Welfare to buyers

98 Producer Surplus (Linear) — Expression / Used For?

Expression: PS = ½ × Q\ × (P\ − P_min); Used For: Welfare to sellers

99 Total Economic Surplus — Expression / Used For?

Expression: TS = CS + PS; Used For: Maximised at free-market equilibrium

100 Deadweight Loss (Tax) — Expression / Used For?

Expression: DWL = ½ × ΔQ × t (where t = tax/unit); Used For: Welfare loss from tax

101 Tax Incidence Share (Consumer) — Expression / Used For?

Expression: (Es) / (Es + \; Used For: Ed \; : ); : Share of tax borne by buyer

102 Tax Incidence Share (Producer) — Expression / Used For?

Expression: (\; Used For: Ed \; : ) / (Es + \; : Ed \; : ); : Share of tax borne by seller

103 Interest-Rate Elasticity of Credit Demand — Expression / Used For?

Expression: Ei = (% Δ Credit) / (% Δ Lending Rate); Used For: Banking application

104 Ep = 0 — Sign / Value / Type of Good / Market?

Sign / Value: Perfectly inelastic; Type of Good / Market: Insulin (vital), salt

105 0 < \ — Sign / Value / Type of Good / Market?

Sign / Value: Ep \; Type of Good / Market: < 1; : Relatively inelastic; : Necessities — electricity, kerosene

106 \ — Sign / Value / Type of Good / Market?

Sign / Value: Ep \; Type of Good / Market: = 1; : Unit elastic; : Rectangular hyperbola

107 1 < \ — Sign / Value / Type of Good / Market?

Sign / Value: Ep \; Type of Good / Market: < ∞; : Relatively elastic; : Luxuries, durable goods

108 \ — Sign / Value / Type of Good / Market?

Sign / Value: Ep \; Type of Good / Market: = ∞; : Perfectly elastic; : Single firm in perfect competition

109 Ey > 1 — Sign / Value / Type of Good / Market?

Sign / Value: Luxury; Type of Good / Market: Foreign holiday, premium credit card

110 0 < Ey < 1 — Sign / Value / Type of Good / Market?

Sign / Value: Necessity (normal); Type of Good / Market: Food grains, electricity

111 Ey = 0 — Sign / Value / Type of Good / Market?

Sign / Value: Pure necessity; Type of Good / Market: Salt

112 Ey < 0 — Sign / Value / Type of Good / Market?

Sign / Value: Inferior; Type of Good / Market: Coarse cereal, bidi

113 Exy > 0 — Sign / Value / Type of Good / Market?

Sign / Value: Substitutes; Type of Good / Market: Tea Coffee

114 Exy < 0 — Sign / Value / Type of Good / Market?

Sign / Value: Complements; Type of Good / Market: Car Petrol

115 Exy = 0 — Sign / Value / Type of Good / Market?

Sign / Value: Unrelated; Type of Good / Market: Salt Cars

116 Es = 0 — Sign / Value / Type of Good / Market?

Sign / Value: Perfectly inelastic supply; Type of Good / Market: Antique, market period

117 Es = ∞ — Sign / Value / Type of Good / Market?

Sign / Value: Perfectly elastic supply; Type of Good / Market: Idealised

118 Es = 1 — Sign / Value / Type of Good / Market?

Sign / Value: Unit-elastic supply; Type of Good / Market: Straight line through origin

119 Both (D , S ) — P\ / Q\?

P\*: Indeterminate

120 D , S — P\ / Q\?

Q\*: Indeterminate

121 Repo Rate — Latest Value / Source / Date?

Latest Value: 5.50 %; Source / Date: RBI MPC, held 1-Oct-2025 and 5-Dec-2025

122 MPC Stance — Latest Value / Source / Date?

Latest Value: Neutral; Source / Date: Changed from Accommodative on 1-Oct-2025

123 SDF Rate — Latest Value / Source / Date?

Latest Value: 5.25 %; Source / Date: RBI

124 MSF Rate / Bank Rate — Latest Value / Source / Date?

Latest Value: 5.75 %; Source / Date: RBI

125 CRR — Latest Value / Source / Date?

Latest Value: 3.00 %; Source / Date: RBI (cut from 4.00 % in tranches Dec-24 to Nov-25)

126 SLR — Latest Value / Source / Date?

Latest Value: 18.00 %; Source / Date: RBI

127 CPI (Headline) — Latest Value / Source / Date?

Latest Value: 0.25 % YoY (Oct-25); 0.10 % (Nov-25); Source / Date: NSO, MoSPI

128 FY 2025-26 CPI Forecast — Latest Value / Source / Date?

Latest Value: 2.6 %; Source / Date: RBI Dec-25 MPC

129 FY 2025-26 GDP Forecast — Latest Value / Source / Date?

Latest Value: 6.8 %; Source / Date: RBI Dec-25 MPC

130 GST Slab Rationalisation — Latest Value / Source / Date?

Latest Value: 2 slabs — 5 % & 18 %; Source / Date: Effective 22-Sep-2025 (Diwali eve)

131 MSP Paddy Common (Kharif 25-26) — Latest Value / Source / Date?

Latest Value: ₹2,369 / qtl; Source / Date: CCEA, 28-May-2025

132 MSP Wheat (Rabi 25-26) — Latest Value / Source / Date?

Latest Value: ₹2,425 / qtl; Source / Date: CCEA, Oct-2024

133 MSP Tur / Arhar (Kharif 25-26) — Latest Value / Source / Date?

Latest Value: ₹8,000 / qtl; Source / Date: CCEA, 28-May-2025

134 8th Pay Commission — Latest Value / Source / Date?

Latest Value: ToR approved; Source / Date: Effective 1-Jan-2026

135 Income-Tax Rebate — Latest Value / Source / Date?

Latest Value: Up to ₹12-lakh taxable income; Source / Date: Union Budget 2025-26

One-linersSupply and Demand