Learning Path
Question & Answer
Choose the Best Answer
Increase in consumer income
Decrease in the price of fuel
Increase in the price of substitute cars
Decrease in consumer preferences for luxury items
Understanding the Answer
Let's break down why this is correct
When people earn more money, they can afford pricier items. Other options are incorrect because Lower fuel costs make driving cheaper, but that only changes how much people want to drive, not how many want a luxury car; If a substitute car becomes more expensive, people might switch to the luxury car, but the effect is small compared to income.
Key Concepts
Shifts in Demand Curve
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Deep Dive: Shifts in Demand Curve
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Definition
Shifts in the demand curve occur when factors other than price influence the quantity of a product demanded at each price level. Changes in consumer income, tastes, fashion trends, and prices of related goods can shift the demand curve either outward (increase in demand) or inward (decrease in demand).
Topic Definition
Shifts in the demand curve occur when factors other than price influence the quantity of a product demanded at each price level. Changes in consumer income, tastes, fashion trends, and prices of related goods can shift the demand curve either outward (increase in demand) or inward (decrease in demand).
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