A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing:
A)everyone has an income elasticity of demand of zero for the product.
B)everyone has the same income elasticity of demand for the product.
C)individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers.
D)any of the above conditions occur.

Question

Quizplus · Accepted Answer

The market demand curve for a product will not shift if total income remains constant and any of the conditions A, B, or C occur. This is because all these conditions ensure that the overall demand for the product does not change with a redistribution of income, either due to uniform income elasticity across consumers (A and B) or balanced changes in demand due to income redistribution (C).

A Change in the Distribution of Income That Leaves Total