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

Explain the relationship between : (i) Prices of other goods and deman

1.	Explain the relationship between : (i) Prices of other goods and demand for the given good , (ii) Income of the buyers and demand for a good.
Answer» SOLUTION :(i) If the two GOODS are substitues, then a FALL in price of one good leads to fall in DEMAND of the other good and vice-versa. On the other hand, if the two goods are complementary goods, a fall in price of one good leads to an increase in demand of the other good and vice-versa (ii)In case the good is a normal good, a rise in income of the consumer leads to an increase in demand for the good and vice-versa. If the good is an inferior good, a rise in income of the consumer leads to a decrease in demand of the commodity and vice-versa.