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Match List-I with List-II

List-IList-II
(A) Substitution effect stronger than the income effect(I) Inferior goods
(B) Income effect stronger than the substitution effect(II) Complementary goods
(C) Demands and income move opposite direction(III) Normal goods
(D) Goods consumed together(IV) Giffen goods

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

Option 1 -> Incorrectly matches substitution effect dominance with complementary goods and other mismatches.

Option 2 -> (A) Normal goods have substitution effect stronger than income effect; (B) Giffen goods have income effect stronger than substitution effect; (C) Inferior goods have demand moving opposite to income; (D) Complementary goods are consumed together.

Option 3 -> Incorrectly matches substitution effect dominance with inferior goods and other incorrect pairings.

Option 4 -> Mismatches by pairing income-demand opposite movement with normal goods.


Hence, Option 2: (A) - (III), (B) - (IV), (C) - (I), (D) - (II) -> For normal goods, the substitution effect dominates because consumers respond more to relative price changes. Giffen goods (strongly inferior) show income effect dominating, causing upward-sloping demand curves. Inferior goods have negative income elasticity (demand falls as income rises). Complementary goods are consumed jointly (like coffee and sugar). -> correct

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