A fall in the average income of consumers,say during a recession,is represented by:
A)an upward movement along the demand curve for product A.
B)a movement along the demand curve for product A that may be up or down,depending on the direction of the price change.
C)a shift of the demand curve for product A.
D)a rotation of the demand curve for product A.
E)a shift of the demand curve for the related good or service.

Question

Quizplus · Accepted Answer

A fall in the average income of consumers is likely to lead to a shift in the demand curve for product A. This is because a change in income is a non-price factor that can affect consumer preferences and the amount of product A they are willing and able to purchase at each price level. This shift may lead to a decrease in demand for product A if it is a normal good (i.e. demand decreases as income decreases), or an increase in demand if it is an inferior good (i.e. demand increases as income decreases).

A Fall in the Average Income of Consumers,say During a Recession,is