Q6 of 36 Page 1

Good X and Good Y are substitute goods. If the price of Good X increases, discuss briefly its likely impact on the demand for Good Y.

OR


If the income of a consumer increases, discuss briefly its likely impact on the demand for an inferior good, Good X.


● Good X and Good Y are substitute goods


● If the price of Good X increases, it will make the Good X costlier and Good Y relatively cheaper.


● The demand for Good Y will increase and the consumer substitutes Good Y over Good X.


OR


● If the income of a consumer increases, it will increase his purchasing power.


● the demand for the inferior good falls, the consumer will shift from an inferior product to a better quality product.


More from this chapter

All 36 →
23

(a) State any two components of M1 measure of the money supply.

(b) Elaborate any two instruments of Credit Control, as exercised by the Reserve Bank of India.


OR


Define Credit Multiplier. What role does it play in determining the credit creation power of the banking system? Use a numerical illustration to explain.


 24

Given the following data, find the missing value of ‘Government Final Consumption Expenditure’ and ‘Mixed Income of Self Employed’.


 9

Explain the law of diminishing marginal utility using a hypothetical schedule.

OR


What is the budget line? Why the budget line is left to right downward sloping?


 17

If in an economy :

Change in initial investments (∆I) = ` 700 crores


Marginal Propensity to Save (MPS) = 0.2


Find the values of the following :


(a) Investment Multiplier (k)


(b) Change in final income (∆Y)