ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Population income affects the demand because the more money people have the more money their going to be willing to spend and the more their going to buy. The actual population changes the demand simply because when there are more people more units will be bought.

Detailed explanation-2: -The income effect identifies the change in consumers’ demand for goods and services based on their incomes. In general, as one’s income rises, they will begin to demand more goods. Similarly, A decrease in income results in lower demand.

Detailed explanation-3: -Ans: True. (Q14) In case of inferior goods, law of demand fails only when negative income effect is lower than the substitution effect.

Detailed explanation-4: -Changes in income levels If the good is a normal good, higher income levels lead to an outward shift of the demand curve while lower income levels lead to an inward shift. When income is increased, the demand for normal goods or services will increase.

Detailed explanation-5: -False. The relationship between price and demand is negative i.e., they are inversely related. By inversely related we mean that as the price of the goods increase the demand of that commodity decreases and vice versa.