Use the following diagram to answer the following questions.

-Refer to Diagram 4-2. Suppose equilibrium price and quantity exchanged are initially P₃ and Q₁, respectively. If Kelly's income increases and peaches are a normal good, then the new equilibrium price and quantity of peaches exchanged will be:

Question

Use the following diagram to answer the following questions.
 
-Refer to Diagram 4-2. Suppose equilibrium price and quantity exchanged are initially P₃ and Q₁, respectively. If Kelly's income increases and peaches are a normal good, then the new equilibrium price and quantity of peaches exchanged will be:

Quizplus · Accepted Answer

When income increases and peaches are a normal good, demand for peaches will increase, leading to a higher equilibrium price and quantity, which matches the description in option A.

Use the Following Diagram to Answer the Following Questions