Figure: Industry Firms (Figure: Industry Firms) Use the Figures

Figure: Industry Firms (Figure: Industry Firms) Use the figures. The market for a normal good ischaracterized by demand curve D₂ and supply curve S₂. A decrease in incomewill cause:

A) the demand curve to shift D₁ causing firms to earn economic profits.The supply curve will not change, so price will rise and firms will earn normal
Profits.
B) the supply curve to shift D₁ causing firms to earn economic profits.The supply curve will decrease to S₁ as firms exit the industry.Eventually the
Market price will rise and firms will earn above normal profits.
C) the demand curve to shift D₁ causing firms to earn economic losses.The supply curve will decrease to S₁ as firms exit the industry.Eventually the market price will rise and firms will earn normal profits.(True Answer
) Correct
D) the supply curve to shift S₁ causing firms to earn economic losses.The demand curve will decrease to D₁ as firms enter the industry.Eventually the
Market price will fall and firms will earn normal profits.