Assume the income of consumers of good X (a normal good)increases.What occurs at the initial equilibrium price for X that signals market participants that the equilibrium price must change?

Question

Quizplus · Accepted Answer

An increase in income of the consumers of a normal good leads to an increase in demand for that good. As a result, at the initial equilibrium price, there will be a shortage of the good as demand exceeds supply. Market participants will observe this shortage and realize that the equilibrium price must increase to clear the market.

Assume the Income of Consumers of Good X (A Normal