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Explain the relationship between: (a) Prices of other goods and demand for the given good. (b) Income of the buyers and demand for a good.

Answer» <html><body><p></p>Solution :(a) There are two <a href="https://interviewquestions.tuteehub.com/tag/types-15918" style="font-weight:bold;" target="_blank" title="Click to know more about TYPES">TYPES</a> of related goods :- (i) Substitute goods, (<a href="https://interviewquestions.tuteehub.com/tag/ii-1036832" style="font-weight:bold;" target="_blank" title="Click to know more about II">II</a>) <a href="https://interviewquestions.tuteehub.com/tag/complementary-2532127" style="font-weight:bold;" target="_blank" title="Click to know more about COMPLEMENTARY">COMPLEMENTARY</a> goods. <br/>In case of substitute goods there is a positive relationship between price of one good and the demand for another i.e as price of one good rises the demand for its substitute rises.<br/>On the other hand, in case of complementary goods there is a negative relationship between price of one good and the demand for its complement i.e as price of one good rises the demand for its complement falls. <br/>(b)There is a positive relationship between income of a consumer and demand for a commodity if the good is a <a href="https://interviewquestions.tuteehub.com/tag/normal-1123860" style="font-weight:bold;" target="_blank" title="Click to know more about NORMAL">NORMAL</a> good whereas there is a negative relationship between income of the consumer and demand of a commodity if the good is an inferior good. <br/>So, with an increase in income of the consumer the demand of a normal good rises and vice-versa and with increase in income of the consumer the demand for an inferior good falls and vice-versa.<br/></body></html>


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