If incomes increase, then the ____ in the market for luxury cars as normal goods ____.
A)supply; decreases
B)supply; increases
C)demand; increases
D)demand; decreases
E)both supply and demand; increase

Question

Quizplus · Accepted Answer

An increase in incomes would lead to an increase in demand for luxury cars as they are normal goods, meaning that as incomes increase, people will purchase more luxury cars, thereby increasing the demand. There is no direct relationship between incomes and supply, so options A and B can be eliminated. Option D is incorrect because as demand increases, suppliers will likely try to meet this increased demand, leading to an increase in supply, not a decrease. Option E is incorrect because there is no indication that the supply would increase as a result of an increase in incomes.

If Incomes Increase, Then the ____ in the Market for Luxury