CBSE Class 12 Economics Consumers Equilibrium And Demand To Micro Economics VBQs

Question.Explain how the demand for a good is affected by the price of its related goods.
Give examples.
Answer. Related goods are either substitutes or complementary Substitutes Goods : When price of a substitute falls, it becomes cheaper than the given good. So the consumer substitutes it for given good will decrease. Similarly, a rise in the price of substitute will result in increase in the demand for given good.
For example Tea and Coffee.
Complementary Goods : When the price of a complementary good falls its demand rises and the demand for the given good will increase. Similarly when price of complementary good increases, then demand for given good decreases.
For example : – Car & Petrol.

Question.Distinguish between normal goods and inferior goods. Give example also.
Answer. Normal Goods : These are the goods the demand for which increases as income of the buyer rises. There is a positive relationship between income and demand or income effect is positive.
Example ; Rice, Wheat
Inferior Goods : These are the goods the demand for which decreases as income of buyer rises. Thus, there is negative relationship between income and demand or income effect is negative.
Example : coarse grain, coarse cloth.