How does the following factors affect the demand of given good? (a) Rise in price of commodity. (b) Fall in price of commodity
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Answer A
If a specific good is a normal good, then an increase in income leads to rise in its demand, while a decrease in income reduces the demand. But if the given commodity is an inferior good, an increase in income will then reduce the demand, and a decrease in income leads to rise in demand
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Answer B
Besides price, demand for a commodity increases or decreases due to the factors below. The demand for goods and services also depends on the incomes of the people. ... But if the given commodity is an inferior good, an increase in income will then reduce the demand, and a decrease in income leads to rise in demand.
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