Suppose that we illustrate demand and supply with quantity on the horizontal axis and price on the vertical axis. Let demand be a function of price and income, Qd (P, I). A change in income level is represented by a movement along the demand curve.

Question

Quizplus · Accepted Answer

A change in income level causes a shift in the demand curve, not a movement along it. Movements along the demand curve are caused by changes in the price of the good itself.

Suppose That We Illustrate Demand and Supply with Quantity on the Horizontal