🧷 Classroom Explanation | IAS Monk Standard Format

📌 Consider the following statements: Other things remaining unchanged, market demand for a good might increase if

1. price of its substitute increases
2. price of its complement increases
3. the good is an inferior good and income of the consumers increases
4. its price falls

📌 Which of the above statements are correct?
(a) 1 and 4 only
(b) 2, 3 and 4
(c) 1, 3 and 4
(d) 1, 2 and 3

📌 Answer: (a)

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🧠 Classroom Explanation

🔹 Core Concept: Determinants of Demand

Market demand for a good depends on:

• Its own price
• Prices of related goods (substitutes & complements)
• Income of consumers
• Tastes, expectations, population, etc.

The question explicitly says “other things remaining unchanged” (ceteris paribus), so we isolate the effect of each factor.

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🔍 Statement-wise Analysis

✅ Statement 1: Price of its substitute increases — Correct

• Substitutes are goods that can replace each other (e.g., tea & coffee).
• If the price of coffee increases, consumers shift to tea.
• Hence, demand for the good increases.

✔️ Correct.

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❌ Statement 2: Price of its complement increases — Incorrect

• Complements are goods consumed together (e.g., tea & sugar).
• If the price of sugar increases, consumption of tea falls.
• Therefore, demand decreases, not increases.

❌ Incorrect.

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❌ Statement 3: Inferior good & income increases — Incorrect

• Inferior goods show an inverse relationship with income.
• When income rises, consumers shift to better alternatives.
• Hence, demand for inferior goods falls, not rises.

❌ Incorrect.

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✅ Statement 4: Its price falls — Correct

• As per the Law of Demand, price and quantity demanded are inversely related.
• Fall in price → increase in quantity demanded.

✔️ Correct.

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✅ Final Answer Logic

Correct statements: 1 and 4 only

➡️ Correct answer: (a)

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🔍 Curiosity Raiser

Why do some goods stop behaving as inferior goods once income crosses a certain threshold?

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🧘 IAS Monk Whisper

Demand is not just about price;
it listens quietly to income, choices, and alternatives.