Question

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

Answer 1

Answer:

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.