Consider the following statements with reference to Other things remaining unchanged market demand f...........

Economic Affairs Inflation

Consider the following statements with reference to Other things remaining unchanged, market demand for a good might increase if

1.price of its substitute increases

2.price of its complement increases

3.the good is an inferior good and income of the consumers increases

4.its price falls

How many of the statements given above are correct?

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Explanation:

1 and 4 only

Correct : If the price of a substitute for a good increases, consumers may shift their preference to the original good, leading to an increase in its market demand.

InCorrect If the price of a complement increases, demand for the original good might decrease because they are usually consumed together.

InCorrect If a good is inferior, an increase in consumers' income may lead to a decrease in the demand for the inferior good as consumers shift to superior alternatives.

Correct If its price falls, the quantity demanded might increase, but it's a movement along the demand curve, not a shift in market demand.