Question

Demand curves

Concept Question 3.5 Question Help Mr. Hildago will experience a substantial increase in income when he accepts a new position at work. Even though the responsibilities of his new job are more taxing, he is excited to spend some of his higher income. Mr. Hildago knows that a good can be characterized as either a normal good or an inferior good and that whether he buys more or less of the good depends on whether or not the good is normal or inferior The demand curve in the diagram to the right represents an inferior good. Using the line drawing tool, llustrate the correct direction of the shift of the demand curve due to Mr. Hildago's increase in income. Properly label this line Prices Carefully follow the instructions above and only draw the required object Quantity (80,20)

Answer 1

As Mr. Hildago will experience a substantial increase in income, then , the demand for good increases (if the good is a normal good ) and decreases if the good is an inferior good .

It is mentioned that demand curve given is for an inferior good , so as his income increases, the demand for that good decreases and therefore demand curve shifts to the left .

This is shown in the following figure: