📚 Learning Guide
Market Demand and Equilibrium Changes
easy

What happens to the market demand curve when consumer incomes increase, assuming the good is a normal good?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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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 incomes increase and the good is a normal good, the market demand curve shifts to the right. This means that at every price level, consumers are now willing to buy more of the good because they have more money to spend. For example, if people start earning higher salaries, they may choose to buy more organic food, which is considered a normal good. As a result, the overall demand for organic food increases, leading to a higher quantity sold in the market. This shift in demand can also lead to an increase in the price of the good if the supply doesn't change, which is how markets adjust to new consumer preferences.

Detailed Explanation

When people have more money, they can buy more of normal goods. Other options are incorrect because Some might think that more money means less demand; It's a common mistake to think that demand stays the same with more income.

Key Concepts

demand curve
Topic

Market Demand and Equilibrium Changes

Difficulty

easy level question

Cognitive Level

understand

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