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How has the price change affected your family?

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Economics Teacher

Price is concidered to be changing when each value of money buys less or more of a particular commodity. For eg: Situation: 1 rupee can purchase 1 kg of Apple Situation 2: 1 Rupee can purchase 2 kg of Apple Price Change affects individual in number of ways For below points we consider price change...
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Price is concidered to be changing when each value of money buys less or more of a particular commodity. For eg: Situation: 1 rupee can purchase 1 kg of Apple Situation 2: 1 Rupee can purchase 2 kg of Apple Price Change affects individual in number of ways For below points we consider price change to be negative, increasing the purchasing power of an individual 1- Increase in purchasing power : When price reduces, an individual can buy more of a commodity at a lesser price. Demand usually goes up when price reduces, since an individual have more purchasing power. 2- Increase/ decrease in Savings When price reduces, an individual have more money to save since he can buy more commodity with lesser price. 3- Increase/ decrease in investiments: The increase in Savings can also lead to increase in investment with price reduction read less
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