Correct Option
Statement 1 is correct: When the price of a substitute good increases, consumers tend to shift their preference and demand towards the relatively cheaper good in question, leading to an increase in its market demand.
Statement 4 is correct: According to the law of demand, assuming all other factors remain constant, a decrease in the price of a good typically results in an increase in its quantity demanded.
Incorrect Options
Statement 2 is incorrect: Complementary goods are consumed jointly. If the price of a complementary good increases, the overall cost of using both goods rises, which generally leads to a decrease in the demand for the good in question. For instance, an increase in fuel prices might reduce the demand for vehicles.
Statement 3 is incorrect: An inferior good is characterized by a decrease in its demand as consumer income rises. When consumers' incomes increase, they typically shift away from inferior goods towards superior or normal goods, thereby reducing the market demand for the inferior good.