Determinants of Market Demand for Goods

Statement 1 is correct because when the price of a substitute increases, consumers switch to this good, raising its market demand. Statement 2 is incorrect because an increase in the price of a complementary good reduces the demand for both. Statement 3 is incorrect because demand for an inferior good decreases when consumer income increases. Statement 4 is correct according to the law of demand, which states that demand increases when its price falls. > Market demand changes positively with substitute prices and inversely with its own price, complement prices, and income for inferior goods. Answer: (a).