# ECONOMICS (CBSE/UGC NET)

## ECONOMICS

### CONSUMERS

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Assume that good X is a normal good. Which of the following helps to explain why a decrease in the price of good X increases the quantity demanded of good X?
 A Good X becomes relatively less expensive than its substitutes, so consumers buy more of good X and fewer of the substitutes B The marginal utility of consuming good X increases as more of good X is consumed C The lower price of good X decreases the marginal utility per dollar; therefore, consumers buy more of good X D The demand curve for good X shifts to the left
Explanation:

Detailed explanation-1: -Answer and Explanation: The correct answer is, a. Good X becomes relatively less expensive than its substitutes, so consumers buy more of good X and fewer of the substitutes.

Detailed explanation-2: -Demand:Which of the following explains why a decrease in the price of a normal good will lead to an increase in the quantity demanded of the good? (A)A lower price will increase consumersâ€™ purchasing power.

Detailed explanation-3: -The correct option is: D. Total benefit decreases at an increasing rate as consumption increases. Demand curve is downward sloping because of the diminishing marginal utility.

Detailed explanation-4: -Changes in the price of related goods: The demand for good X may be changed by increases or decreases in the prices of other, related goods. These related goods are usually divided into two categories called substitutes and complements.

Detailed explanation-5: -When the price of a normal good falls, there are two identifying effects: The substitution effect contributes to an increase in the quantity demanded because consumers substitute more of the good for other goods. The reduction in price increases the consumerâ€™s ability to buy goods.

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