Question

Which of the following will result in a DECREASE in demand (i.e., a leftward shift of the demand curve)? An increase in income, if the good is normal A decrease in the price of a complement to the good An increase in the price of a substitute for the good A decrease in the price of a substitute for the good
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Answer 1

Answer:

RATHER THAN PRICE THE OTHER FACTORS WHICH DECREASE THE DEMAND FOR A PRODUCT .

Answer 2

The following will result in a DECREASE in demand (i.e., a leftward shift of the demand curve):

A decrease in the price of a substitute for the good.

Normal Goods:

• Normal goods are those goods whose demand will increase with an increase in income. so, the first statement is incorrect.

Complement Goods:

• Complement goods are those goods that complement each other that is they are consumed together usually. For example tea and biscuits.

• The relation between their quantity demanded is direct. They are positively correlated.

• ​If the quantity consumed of tea increases then the demand for biscuits will also increase. So, the second statement is incorrect.

Substitute Goods:

• Substitute goods are those goods that can substitute each other that is one can be used in place of the other. For example tea and coffee.

• The demand for substitute goods is inverse to each other that is they are negatively correlated. So, the third statement is also incorrect.
• If tea increases in price, we will purchase more coffee butter. so the last statement is correct.