Which of the following statements is FALSE?
A) An increase in income causes an increase in the demand for a normal good.
B) An increase in income causes a decrease in the demand for an inferior good.
C) A decrease in income causes the demand curve for a normal good to shift to the left.
D) An increase in income causes the demand curve for an inferior good to shift to the right.

Question

Quizplus · Accepted Answer

An increase in income causes a decrease in the demand for an inferior good, so statement D is false. When people's income increases, they tend to purchase more normal goods, which leads to an increase in demand for these goods. Conversely, when people's income decreases, they tend to purchase fewer normal goods, leading to a leftward shift in the demand curve. However, for inferior goods, as income increases, demand decreases, leading to a leftward shift in the demand curve.

Which of the Following Statements Is FALSE