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22 June, 10:01

Item 4 Assume that good X is a normal good. If the price of good X increases, what will happen?

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  1. 22 June, 10:56
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    Demand will fall.

    Step-by-step explanation:

    The most expected result of a rise in price for a normal good is the reduction in its demand. Any normal product such as shampoos, will face a reduction in it's demand if its prices rise.

    Another impact may also be that the demand for a substitute good may rise as a result of price rise in good X.

    Another impact that may come occur is the excess supply of good X, as good X will face a loss in demand, there will be more quantity available then demanded by the consumers.
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