Question

Explain the effect of following on demand for a good (1) rise in income (2) rise in price of related goods

Answer 1

Explanation:

1)rise in income: when income of the consumer Rises , the the quantity demanded falls

2)the rise in price of related goods:

• complementary goods : for example -- when price of a car rises ,the demand of car falls as well as the the demand for petrol falls as it is a related good
• substitute goods : for example--when the price of tea rises, the demand for tea falls and the demand for coffee rises as it is substitute good