Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The demand curve shifts to the left
B
The demand curve remains unchanged
C
The demand curve shifts to the right
D
The demand curve becomes vertical
Understanding the Answer
Let's break down why this is correct
Answer
When consumers’ incomes rise, they can afford more of a normal good, so the quantity demanded at each price level goes up. This causes the entire demand curve to shift outward to the right. The reason is that a higher income increases the consumer’s purchasing power, making the good more attractive. For example, if people earn more and decide to buy more coffee at every price, the coffee market’s demand curve moves to the right.
Detailed Explanation
When people have more money, they can buy more of the good at every price. Other options are incorrect because Some think higher income means people buy less; Income change does affect demand.
Key Concepts
income effect
increase in demand
Topic
Shifts in Demand Curve
Difficulty
medium level question
Cognitive Level
understand
Practice Similar Questions
Test your understanding with related questions
1
Question 1How does an increase in consumer income typically affect the market demand for luxury goods?
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Practice
2
Question 2Which of the following events would most likely cause a rightward shift in the demand curve for a normal good?
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3
Question 3How does an increase in consumer income typically affect the demand curve for normal goods, and what is the underlying reason for this shift?
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4
Question 4In a competitive market, if there is a significant improvement in technology that allows producers to create goods at a lower cost, how is the supply curve affected, and what is the expected impact on consumer prices?
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5
Question 5A sudden increase in consumer income leads to a shift in the demand curve for luxury cars. Which of the following best explains this change?
mediumEconomics
Practice
6
Question 6When consumer preferences shift in favor of a product, this results in a(n) __________ of the demand curve for that product.
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7
Question 7Increase in consumer income : outward shift in demand curve :: decrease in consumer preferences : ?
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8
Question 8Which of the following factors can cause a shift in the demand curve for a product? Select all that apply.
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Practice
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