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Case Study

VIKAS’S DILEMMA WHETHER THE INDIAN GOLD MARKET IS AN EXAMPLE OR EXCEPTION TO THE LAW OF DEMAND

Dr.B.Venkatraja, Associate Professor-Economics at SDM Institute for Management Development, Mysore
Law of demand, elasticity of demand, gold market

Abstract: The law of demand and elasticity of demand is the fundamental microeconomic concepts with which management students are expected to be thorough. A good understanding of these concepts will help nurture their thought process and take right managerial or business decisions, particularly on product or service pricing. It is in this context, the case through the application of the theoretical concepts explains the landscape of the Indian gold market. The key discussion is revolved around whether the Indian gold market is following the pattern of the price-demand relationship as advocated in the law of demand. Consumer behaviour to the gold demand is drastically different from other product or service markets. Being a unique and complex market, the case also analyses the degree of demand elasticity to price shocks. By examining the income effect and substitution effect, it also analyses whether non-price factors influence the demand for the yellow metal. The case uses the annual data from 1991 to 2020 from authentic secondary sources. The case is narrated as a dialogue between the Professor and a student for better understanding.

Learning Objectives
The consumers’ approach towards gold in the Indian market is unique and cannot be compared with other product or service markets.
The data depict that there are times people buy more with rising prices of gold and buy less with decreasing prices.
This paradoxical trend is the focus and is an issue for discussion.

  • Pub Date:
    17 Dec 2022
  • Source:
    SDMIMD
  • Discipline:
    Managerial Economics
  • Product#:
    1854
  • Keywords:
    Law of demand, elasticity of demand, gold market
  • Length:
    Pdf : 10 page(s) ,

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