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Substitute Goods

State whether...

Question

State whether the following statement is true or false. ‘The demand for a commodity always increases with increase in the prices of other goods’.

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Solution

Answer:

The given statement is false.

If the price of a complementary good increases, the demand for the commodity will fall. The demand for a commodity will rise when the price of a substitution will increase.

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Similar questions

Q. state whether true or false:
Rise in the price of substitute good leads to increase in its own demand?

Q. Write True or False with a reason.
Supply increases in response to increase in price of the concerned commodity.

Give true or false giving reasons:

a. If quantity demanded of good X rises with the fall in household's income, it is a normal good.

b. If demand of CNG rises due to rise in the price of petrol , they are substitutes.

c. When the price of the commodity falls its demand increases.

d. Demand for a commodity may rise even at constant price.

e. Individual demand is related to micro, market demand is related to macro.

f. In case of normal goods income effect is negative.

g. in case of inferior goods law of demand fails.

h. Demand curve of salt shifts when its price falls.

i. When price of commodity X rises , its demand decreases.

Q. State whether the following statements are True of False :
Demand for necessary goods is inelastic.

Q. State whether the following statements are true or false. Give reasons.
An increase in the rate of tax with an increase in income is called proportional tax.

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