In the market for a normal good, an increase in income will cause an increase in ______, an increase in quantity ______, and a(n) ______ in price.
A) demand; supplied; increase
B) demand; supplied, decrease
C) supply; demanded; decrease
D) supply; demanded; increase

Question

Quizplus · Accepted Answer

An increase in income will cause an increase in demand (the amount consumers are willing and able to buy), an increase in quantity supplied (the amount producers are willing and able to sell), and an increase in price. This is because the increase in income shifts the demand curve to the right, increasing both price and quantity demanded. At the same time, the increase in demand puts upward pressure on prices, causing an increase in quantity supplied.

In the Market for a Normal Good, an Increase in Income