Question
Does a fall in income have the same effect on demand for the given commodity?
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Answer
No, Fall in income does not have the same effect on demand for the given commodity.
- If the given commodity is a normal good, the fall in income will reduce the demand for the normal goods.
- If the given commodity is an inferior good, the fall in income will raise the demand for the inferior goods.
- If the given commodity is a necessity, the fall in income will not change the demand for the necessity of goods.
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