Economics Chapter on Demand for Commodity X

Study Notes

A consumer's increase in income generally leads to a rise in the quantity demanded for commodity X.
Table displays two demand schedules for commodity X based on different income levels: ₹5,000 and ₹10,000.
Demand increases at each price level when income rises:
- At ₹4, the quantity demanded increases from 15 units (income = ₹5,000) to 20 units (income = ₹10,000).
The demand curve for commodity X shifts rightward as income rises, indicating increased purchasing desire.

Normal Goods:
- Demand increases with rising incomes; examples include furniture, clothing, consumer durables.
- A decrease in income (e.g., during a recession) typically reduces demand for normal goods.
Inferior Goods:
- Demand initially rises with income but can decline beyond a certain income level.
- Essential goods like food grains and clothing tend to see less than proportional demand increases relative to income.
Luxury and Prestige Goods:
- Demand continues to rise with increasing income beyond a specific threshold.

An increase in income leads to a rightward shift of the demand curve.
A decrease in income shifts the demand curve leftward, reflecting reduced quantity demanded at all prices.

Factors Causing Increase in Demand:
- Rise in income (for normal goods).
- Increase in wealth (for normal goods).
- Higher prices of substitute goods.
- Lower prices of complementary goods.
- An increase in the number of buyers.
- Positive change in consumer tastes favoring the commodity.
- Redistribution of income favoring the commodity.
Factors Causing Decrease in Demand:
- Fall in income (for normal goods).
- Decrease in wealth (for normal goods).
- Decrease in prices of substitute goods.
- Higher prices of complementary goods.
- A decrease in the number of buyers.
- Negative change in consumer tastes against the commodity.
- Redistribution of income away from those favoring the commodity.