Statement I: A rise in consumers’ income shifts the demand curve for clothes to the right.
Statement II: A rise in consumers’ income does not shift the supply curve of clothes.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both Statement I and Statement II are true.
Statement I: A rise in consumers’ income shifts the demand curve for clothes to the right. — True. Clothes are a normal good: demand for them rises with income, so the demand curve shifts right.
Statement II: A rise in consumers’ income does not shift the supply curve of clothes. — True. Income changes what buyers want, not firms’ costs. The supply curve shifts only with changes in technology or cost of production.
NCERT (2026-27): “Demand Shift … Suppose due to a hike in the salaries of the consumers, their incomes increase. … With an increase in income, consumers are able to spend more money on some goods. But recall from Chapter 2 that the consumers will spend less on an inferior good with increase in income whereas for a normal good, with prices of all commodities and tastes and preferences of the consumers held constant, we would expect the demand for the good to increase at each price as a result of which the market demand curve will shift rightward. Here we consider the example of a normal good like clothes, the demand for which increases with increase in income of consumers, thereby causing a rightward shift in the demand curve. However, this income increase does not have any impact on the supply curve, which shifts only due to some changes in the factors relating to technology or cost of production of the firms.” |