Q. 65.0( 1 Vote )

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Answer :

Complementary goods are those goods which are consumed together. The consumption of one good in the absence of the other will not give any satisfaction to the consumer. When the price of the complementary good falls, the demand for the good X rises. With the decrease in the price of the complementary good, the consumer would consume more of good X since it is a normal good. Thus the demand curve shifts to the right. It will shift from D1 to D2.



ii)


Since the product X is said to have harmful effects on human health, the consumption of the good will decrease even though X is a normal good. This is because the negative advertisement related to the commodity will shift the taste and preferences of the consumer from X to other goods. Thus the demand curve shifts to the left. It will shift from D2 to D1.



iii)


Normal goods are those goods whose demand is directly related to income. As the income increases, the demand for the commodity also rises. Thus X being a normal good will experience an increase in demand when the income of the consumer increases. This will shift the demand curve to the right. It will shift from D1 to D2.



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