Study responsiveness of demand for commodity like salt ,matchboxes , TV, candle, food grains with respond to income level of five families
Answers
Demand refers to the willingness of consumer to buy a commodity and ability of consumer to fullfil his willingness.
Income level of five families affects the demand for commodities like salt, matchboxes, TV, candle and food grains.
Income effect shows change in consumption of commodities when income level of consumers changes.
1. Salt :- Salt is a necessary good. Even if family income decreases, the demand of salt will not decrease. In case income increases, demand for salt will remain same. Salt is irrespective of income.
2. Matchboxes :- Matchboxes take a very slight proportion of the income level and it is a normal good. When income rises, demand for matchboxes will increase and vice versa.
3. TV :- TV is a luxury good. When income increases, demand for TV increases too and vice versa.
4. Candle :- Candle is a normal good. When income increases, demand for candle increases too and vice versa.
5. Food Grains :- Food grain is a necessary good. It is irrespective of income level of consumers. Consumer will buy the required amount of food grain even after decrease in his income.