Exhibit 4-4 Supply and demand curves for good X
-Which of the graphs in Exhibit 4-4 illustrates an increase in buyers' income, assuming that good X is a normal good?

Question

Exhibit 4-4 Supply and demand curves for good X 
-Which of the graphs in Exhibit 4-4 illustrates an increase in buyers' income, assuming that good X is a normal good?

Quizplus · Accepted Answer

Graph A illustrates an increase in buyers' income for good X as both the demand curve shifts to the right and the equilibrium quantity increases. This indicates that as buyers' incomes increase, their demand for good X also increases since it is a normal good. Graphs B and C do not show any change in buyers' income and therefore do not depict an increase in demand for good X due to changes in income.

Exhibit 4-4 Supply and Demand Curves for Good X