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When the income of households increases, what is the likely result? a

Economics Nov 28, 2020

When the income of households increases, what is the likely result?

a.

The demand curve shifts to the left

b.

The quantity demanded increase

c.

The supply curve shifts to the left

d.

The demand curve shifts to the right

Expert Solution

The correct answer is (d). The demand curve shifts to the right.

This is because when the income of households increases, they can buy more goods and services at the given price level. This essentially means a shift in the demand curve to the right. The shift of demand curve to the right means demand for more goods and services at the given prices.

The other options are incorrect because the change in household income does not affect the supply curve. Moreover, quantity change means a movement on the same demand curve which will only happen due to changes in price level. The demand curve cannot shift to the left because of increase in income. This would imply less demand when income rises which is an unlikely scenario.

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