The correct answer is C. A fall in the price of a commodity leads to a rise in consumers real income.
Consumers’ real income is the amount of goods and services that can be purchased with a given amount of money. When the price of a commodity falls, consumers’ real income increases because they can now purchase more of that commodity with the same amount of money. This can lead to an increase in demand for other commodities, as consumers have more money to spend.
Option A is incorrect because a fall in the price of a commodity does not lead to a shift in demand. Demand is the amount of a good or service that consumers are willing and able to purchase at a given price. A shift in demand occurs when there is a change in the factors that affect demand, such as consumer preferences, income, or the prices of related goods. A fall in the price of a commodity does not affect any of these factors, so it does not lead to a shift in demand.
Option B is incorrect because a fall in the price of a commodity does not lead to a fall in demand. As explained above, a fall in the price of a commodity leads to an increase in consumers’ real income, which can lead to an increase in demand for other commodities. However, it is possible that the demand for the commodity itself may fall. This could happen if the fall in price is due to a decrease in the quality of the commodity, or if consumers believe that the quality of the commodity is likely to decrease in the future.
Option D is incorrect because a fall in the price of a commodity does not lead to a fall in consumers’ real income. As explained above, a fall in the price of a commodity leads to an increase in consumers’ real income.