Coffee is a normal good. A decrease in income
A) raises the price of coffee and increases the quantity demanded of coffee.
B) raises the price of coffee and increases the quantity supplied of coffee.
C) lowers the price of coffee and decreases the quantity demanded of coffee.
D) lowers the price of coffee and decreases the quantity supplied of coffee.
E) causes none of the above.

Question

Quizplus · Accepted Answer

Since coffee is a normal good, a decrease in income would lead to a decrease in demand for coffee. This decrease in demand would lower the price of coffee and, as a result, decrease the quantity supplied, as suppliers are less willing to supply at lower prices.

Coffee Is a Normal Good