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Originally Posted by sibtainafzaal
increase in income shifts the demand curve towards right, meaning that there is an increase in demand and prices increase accordingly. .
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No, Not Necessarily it happens. Increase in income may shift demand curve downward signifying the "good" as "inferior". And as regards "Change in price accordingly" then Demand curve remains unshifted with variation in prices. Change in prices only makes movement along the curve or it creates rotation along the Demand Curve and it doesn't shift either upward or downward. Mind that factors other than "price change" brings shift in demand curve and price itself doesn't.
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Originally Posted by sibtainafzaal
in case of substitutes if the price of substitute is low then there is a decrease in demand. but if the substitute is inferiror and the income is high then there wount be any change to the demand of the superior product as people can afford the superior item.
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Mind that susbstitution effect is always negative regardless of the nature of the commodity, be it Normal or Inferior or Strong Inferior.
Kind Regards,