Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:
A)an increase in equilibrium price and quantity.
B)a decrease in equilibrium price and an increase in equilibrium quantity.
C)a decrease in both equilibrium price and quantity.
D)an increase in equilibrium price and a decrease in equilibrium quantity.

Question

Quizplus · Accepted Answer

An increase in income will shift the demand curve to the right, increasing both the equilibrium price and quantity. The positively sloped supply curve only reinforces this effect, leading to an increase in both equilibrium price and quantity.

Given a Supply Curve That Is Positively Sloped and a Demand