Exhibit 3-2

-Refer to Exhibit 3-2.Suppose equilibrium is at point A.Something then changes and equilibrium becomes point C.Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good)?
A) There was an increase in income and production technology advanced.
B) There was a decrease in income and production technology advanced.
C) There was an increase in the price of a substitute and an increase in wages.
D) There was a decrease in the price of a complement and an increase in wages.

Question

Exhibit 3-2
 
-Refer to Exhibit 3-2.Suppose equilibrium is at point A.Something then changes and equilibrium becomes point C.Which of the following is consistent with the change in equilibrium from point A to C (assuming that good X is a normal good)?
A) There was an increase in income and production technology advanced. 
B) There was a decrease in income and production technology advanced. 
C) There was an increase in the price of a substitute and an increase in wages. 
D) There was a decrease in the price of a complement and an increase in wages.

Quizplus · Accepted Answer

An increase in income for a normal good would increase demand, and an advancement in production technology would increase supply, both of which could shift equilibrium from point A to C.

Exhibit 3-2 -Refer to Exhibit 3-2.Suppose Equilibrium Is at Point A.Something Then