Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

D1 and S1 denote the starting demand and supply curves for a normal product. They later shift to D2 and S2. Which combination of changes would cause the market equilibrium for the product to move from X1 to X2?

  • Aa fall in the price of a raw material used in the manufacturing and a decrease in the price of a complementary good
  • Ban increase in average consumer incomes and an increase in the level of an indirect tax imposed
  • Can increase in the price elasticity of demand for the product and a fall in its price elasticity of supply
  • Da rise in the population and an increase in the price of labour used in manufacturing

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