In the context of economic theory, the 'Law of Demand' is derived from:
A. Only the income effect
B. Both substitution and income effects for normal goods
C. Only the substitution effect
D. Increasing marginal utility
Answer: Option B
Solution (By JKSSB Mock Tests)
For normal goods, both the substitution effect and the income effect of a price change work in the same direction, reinforcing the inverse relationship between price and quantity demanded.
No comments yet. Be the first to start the discussion!