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An increase in income always leads to a rise in demand for goods. Defend or refute, giving reasons for the same.
Concept
Other Determinants of Demand
Show Answer
- Refute. The word "always" is wrong.
- The book says a rise in income raises the demand for several goods, not all goods.
-
With more income, people choose
higher-quality
products, so the demand for some cheaper goods can
fall
.
-
Example
- A family whose income rises stops using the bus and buys a car.
- Its demand for bus travel falls.
- Goods like this are called inferior goods .
-
Example
-
For some basic goods, demand hardly changes with income.
- Example - A family does not eat more salt because its income doubled.
