Chapter 5, Problem 3MCQ

To determine

The factor which increases the demand for a normal good.

Explanation of Solution

In the case of two complementary goods, a fall in the price of one will result in a higher demand for the second good.

For example, pen and ink are complementary goods. When the price of ink falls, the demand for pens will rise.

Thus, option “e” or “the price of a complement” is the correct option.

The other options are incorrect because:

• A fall in price will reduce the quantity demanded of a product, it doesn’t increase the demand. As price change causes the movement along the demand curve, not the shift.
• A fall in income will reduce the demand for a normal good.
• A fall in the price of substitutes will reduce the demand for the original good.
• A fall in taste and preferences for a product will reduce the demand for that product.