Explain the effect of the following on demand for a good:
(i) Fall in Income for Normal Goods.
(ii) Fall in Income for Inferior Goods.

Explanation

(i) Fal in Income for Normal Goods:

(a) For normal commodity, with a fall in income, the demand of the commodity also falls and vice -versa.
(b) Shortly, direct relationship exists between income of a consumer and demand of normal commodity.
(c) Due to fall in Income of a consumer (say from Rs 6000to Rs 5000), the demand of normal goods shifts leftwards from DD to `D_(1)D_(1)` as shown in figure above.
(ii) Fall in Income for Inferior Goods:

For inferior goods, with a fall in income, the demand of the commodity rises and vice-versa.
(b) Shortly, inverse relationship exists between income of a consumer and demand of inferior goods,