How does an increase in income affect the demand for the following:(i)

1.	How does an increase in income affect the demand for the following:(i) A normal good(ii) An inferior good
Answer» A normal good (i) There is a positive relationship between income and demand of normal goods. (ii) Demand curve shifts rightwards with the rise in income of consumer and demand curve shifts leftwards with the fall in income of consumer. An inferior good (i) There is negative relationship between of consumer income of consumer and demand of inferior goods. (ii) Demand curve shifts leftwards with the of rise in income of consumer and demand curve shifts rightwards with the fall in income of consumer.

How does an increase in income affect the demand for the following:(i) A normal good(ii) An inferior good

Answer»

A normal good

(i) There is a positive relationship between income and demand of normal goods.

(ii) Demand curve shifts rightwards with the rise in income of consumer and demand curve shifts leftwards with the fall in income of consumer.

An inferior good

(i) There is negative relationship between of consumer income of consumer and demand of inferior goods.

(ii) Demand curve shifts leftwards with the of rise in income of consumer and demand curve shifts rightwards with the fall in income of consumer.