ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The demand for a normal good increases if income increases. The demand for an inferior good decreases if income increases. Expected future income and expected future prices influence demand today. For example, if the price of a computer is expected to fall next month, the demand for computers today decreases.

Detailed explanation-2: -An example of substitute goods is Coca-Cola and Pepsi; the interchangeable aspect of these goods is due to the similarity of the purpose they serve, i.e fulfilling customers’ desire for a soft drink. These types of substitutes can be referred to as close substitutes.

Detailed explanation-3: -The correct option is e. a decrease in the price of complementary goods. There are different demand determinants. Some examples of these determinants are consumers’ income, number of consumers, price of related goods, and consumer expectations.

Detailed explanation-4: -An increase in the price of a good will decrease demand for its complement while a decrease in the price of a good will increase demand for its complement. 3. Income is another factor that can affect demand.