Exhibit 3-2

Good X

Refer to Exhibit 3-2. Which of the following would result in a movement from point A on D₁ to point B on D₂?

Question

Exhibit 3-2 Good X Refer to Exhibit 3-2. Which of the following would result in a movement from point A on D₁ to point B on D₂?

Quizplus · Accepted Answer

If the income of the buyers of good X increases assuming good X is a normal good, it means that the buyers will have more income to spend on the good, leading to an increase in demand for good X, and thus a movement from point A to point B (an upward shift in the demand curve for good X). An increase in a per-unit tax on good X, a decline in technology in the production of good X, or an increase in income of the buyers of good X assuming good X is an inferior good would all lead to a decrease in demand for good X, and thus a movement to the left along the demand curve, away from point B.