Exhibit 5-8 Supply and demand curves for good X

-As shown in Exhibit 5-8, assuming good X is a normal good, a decrease in consumer income, other factors held constant, will move the equilibrium from point E to point:
A) X.
B) Z.
C) Y.
D) W.

Question

Exhibit 5-8 Supply and demand curves for good X
​ 
-As shown in Exhibit 5-8, assuming good X is a normal good, a decrease in consumer income, other factors held constant, will move the equilibrium from point E to point:
A) X. 
B) Z. 
C) Y. 
D) W.

Quizplus · Accepted Answer

A decrease in consumer income will decrease the demand for good X, shifting the demand curve to the left. This will create a new equilibrium at a lower quantity and price, which is point Y.

Exhibit 5-8 Supply and Demand Curves for Good X