Question : For an inferior good , demand falls when
Option 1: Price rises .
Option 2: Income rises.
Option 3: Price fall.
Option 4: Income fall.
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Correct Answer: Income rises.
Solution : The correct option is income rises.
When consumer incomes rise, the demand for inferior goods tends to decrease, and conversely, when incomes fall, the demand for these goods tends to increase. This phenomenon occurs because as consumers experience an increase in income, they often opt for higher-quality or more desirable alternatives, reducing their demand for inferior goods.
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Question : When price of a substitute of commodity 'x' falls, the demand for 'x':
Option 1: falls
Option 2: remain unchanged
Option 3: increase at an increasing rate
Option 4: rises
Question : Cross-demand expresses the functional relationship between
Option 1: demand and price of related commodities
Option 2: demand and income
Option 3: demand and price
Option 4: demand and supply
Question : Equilibrium price is the price when :
Option 1: Supply is greater than demand .
Option 2: Supply is less than demand .
Option 3: Demand is very high .
Option 4: Supply is equal to demand.
Question : Which of the following occurs when labour productivity rises?
Option 1: The equilibrium nominal wage falls.
Option 2: The equilibrium quantity of labour falls.
Option 3: Competitive firms will be induced to use more capital.
Option 4: The labour demand curve shifts to the right.
Question : Demand for complementary goods is known as
Option 1: Joint demand .
Option 2: Derived demand .
Option 3: Direct demand .
Option 4: Cross demand .
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