Ray's company just announced that all employees will be receiving a 5 percent pay cut in order to avoid the company shutting down. Ray's demand for coffee, a normal good, will likely _____ and his demand curve will _____.
A) decrease; shift to the right
B) decrease; shift to the left
C) increase; shift to the right
D) increase; shift to the left

Question

Quizplus · Accepted Answer

A decrease in pay usually leads to a decrease in people's ability to purchase goods and services. As coffee is a normal good, its demand will also decrease due to the pay cut. The demand curve for coffee will shift to the left.

Ray's Company Just Announced That All Employees Will Be Receiving