For a normal good, an increase in consumer income will lead to I. a movement down the demand curve
II. a rightward shift in the demand curve
III. a reduction in supply

Question

Quizplus · Accepted Answer

An increase in consumer income leads to an increase in demand for normal goods. This results in a rightward shift in the demand curve as consumers are willing to buy more goods at each price than before. There is no relation between changes in consumer income and supply of a good. Hence, options I and III can be eliminated.

For a Normal Good, an Increase in Consumer Income Will