Consider the following statements: Other things remaining unchanged, market demand for a good might increase if: 1. Price of its substitute increases 2. Price of its complement increases 3. The good is an inferior good and income of the consumers increases 4. Its price falls Which of the above statements are correct?
Question:
Consider the following statements: Other things remaining unchanged, market demand for a good might increase if: 1. Price of its substitute increases 2. Price of its complement increases 3. The good is an inferior good and income of the consumers increases 4. Its price falls Which of the above statements are correct?
Consider the following statements: Other things remaining unchanged, market demand for a good might increase if: 1. Price of its substitute increases 2. Price of its complement increases 3. The good is an inferior good and income of the consumers increases 4. Its price falls Which of the above statements are correct?
Options
Answer: 1 and 4 only
Explanation:
Demand for a good rises when its substitute becomes costly or its own price falls. Higher price of a complement or higher income for inferior goods reduces its demand.
Explanation:
Demand for a good rises when its substitute becomes costly or its own price falls. Higher price of a complement or higher income for inferior goods reduces its demand.
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