ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Only the demand for X will rise.
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Demand for X, Y and Z will rise.
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Demand for Y will fall and for Z will rise.
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Demand for Y will rise and for Z will fall.
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Detailed explanation-1: -If X increases, then the demand for Z decreases because they are substitutes, and if the supply of one commodity rises, the demand for the other decreases.
Detailed explanation-2: -X and Y being substitute goods, if the price of Y increases, then it will reduce the demand for Y and people will switch to X, which will raise the demand for X.
Detailed explanation-3: -The demand for a good increases, if the price of one of its substitutes rises. The demand for a good decreases, if the price of one of its substitutes falls.
Detailed explanation-4: -In the case of substitute goods, a fall in the price of Good X causes a fall in demand for Good Y.
Detailed explanation-5: -Solution : (i) Goods x and y are complementary goods as with fall in price of x, demand for good y rises. <br> (ii) Goods x and y are substitute goods as with the fall in price of x, demand for good y also falls. Step by step solution by experts to help you in doubt clearance & scoring excellent marks in exams.