📚 Learning Guide
Shifts in Demand Curve
hard

A decrease in consumer income will always lead to a leftward shift in the demand curve for normal goods, but not for inferior goods.

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Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

When people earn less, they buy fewer normal goods, so the demand curve for those goods shifts leftward. If a good is inferior, a drop in income can actually make it more attractive, causing its demand curve to shift rightward. The reason is that normal goods are purchased more as income rises, while inferior goods are chosen more when money is tight. Thus, a lower income reduces the quantity demanded of normal goods but can increase the quantity demanded of inferior goods. For example, coffee is a normal good that people buy less of when their income falls, whereas instant noodles are inferior and people buy more of them as income drops.

Detailed Explanation

When people have less money, they buy less of normal goods. Other options are incorrect because The idea that the statement is false comes from thinking the word 'always' is wrong.

Key Concepts

Shifts in Demand Curve
Normal vs. Inferior Goods
Consumer Income
Topic

Shifts in Demand Curve

Difficulty

hard level question

Cognitive Level

understand

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