📚 Learning Guide
Market Demand and Equilibrium Changes
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How does an increase in consumer income typically affect the demand curve for normal goods in a market, assuming all other factors remain constant?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

The demand curve shifts to the left

B

The demand curve shifts to the right

C

The demand curve remains unchanged

D

The demand curve becomes vertical

Understanding the Answer

Let's break down why this is correct

Answer

When consumer income increases, people generally have more money to spend. This usually leads to an increase in demand for normal goods, which are products that people buy more of when they have higher incomes. As a result, the demand curve for these goods shifts to the right, meaning that at every price level, more of the good is demanded than before. For example, if a family’s income rises, they might decide to buy more organic food instead of regular food, demonstrating how higher income can change their purchasing choices. This shift in demand can lead to higher prices and more sales for businesses selling those normal goods.

Detailed Explanation

When people earn more money, they can buy more things. Other options are incorrect because Some might think that more income means less demand; It's a common mistake to think that income changes don't affect demand.

Key Concepts

demand curve
market dynamics
Topic

Market Demand and Equilibrium Changes

Difficulty

medium level question

Cognitive Level

understand

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