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Giving reasons, statethe following statements are true or false: (i) An increase in the price of Coke would result in decrease in the demand for Pepsi. (ii) An increasein the price of sugar would result in an increase in the demand for tea. An increase in the income of a consumer would result in anincrease in demand for all types of goods that are demanded by a consumer. |
| Answer» <html><body><p></p><a href="https://interviewquestions.tuteehub.com/tag/solution-25781" style="font-weight:bold;" target="_blank" title="Click to know more about SOLUTION">SOLUTION</a> :(i) False : Coke and Pepsi are substitute goods. An increase in the price of Cokewould induce consumers to substitute Coke by Pepsi. Demand for Pepsi will increase.<br/> (<a href="https://interviewquestions.tuteehub.com/tag/ii-1036832" style="font-weight:bold;" target="_blank" title="Click to know more about II">II</a>) False: Sugarand <a href="https://interviewquestions.tuteehub.com/tag/tea-664165" style="font-weight:bold;" target="_blank" title="Click to know more about TEA">TEA</a> are complementary goods. An increase in price of sugar would make tea <a href="https://interviewquestions.tuteehub.com/tag/costlier-2037861" style="font-weight:bold;" target="_blank" title="Click to know more about COSTLIER">COSTLIER</a>. Hence, the demand for tea would decrease.<br/> (iii) False : With the increase in income, the consumer.s demand for <a href="https://interviewquestions.tuteehub.com/tag/normal-1123860" style="font-weight:bold;" target="_blank" title="Click to know more about NORMAL">NORMAL</a> goods will increase. Demand for inferior goods may, in fact, fall.</body></html> | |