The average income level, as measured by the per capita GDP, has increased by 28% in Country X. Which of the following is most likely to happen in the market for denims, a normal good, in Country X?
A) Consumers will expect the price of denims to remain the same in the future.
B) The cost of producing denims will fall.
C) The demand for substitutes for denims will increase.
D) The demand curve for denims will shift to the right.

Question

Quizplus · Accepted Answer

An increase in the average income level generally leads to an increase in the demand for normal goods, such as denims, because people have more disposable income to spend. This is represented by a rightward shift in the demand curve.

The Average Income Level, as Measured by the Per Capita