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Which of the following will cause an increase in demand for a good?

  1. A
    an increase in income if the good is an inferior goods
  2. B
    a decrease in the price of the goods
  3. C
    a decrease in income if the good is a normal goods
  4. D
    an increase in the price of its substitute goods

Solution & Step-by-step Explanation

An increase in the price of a substitute good makes the consumer turn to this alternative good, hence shifting the entire demand curve outwards to the right (increase in demand).

Practice this question

Try it yourself before checking the explanation above.

Which of the following will cause an increase in demand for a good?
A
an increase in income if the good is an inferior goods
B
a decrease in the price of the goods
C
a decrease in income if the good is a normal goods
D
an increase in the price of its substitute goods

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MicroeconomicsDemand and SupplyConsumer Behaviour

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