CMA Foundation · Fundamentals of Business Economics and Management · The Fundamentals of Economics
Which of the following would cause a rightward shift of the demand curve for tea, assuming tea is a normal good?
A rise in consumers' incomes shifts the demand curve for a normal good like tea to the right, because people buy more at every price. Changes in the good's own price only move along the curve, and input costs affect supply rather than demand.
- AA fall in the price of tea
- BA rise in consumers' incomesCorrect
- CA rise in the price of tea
- DAn increase in the cost of tea leaves
Explanation
For a normal good, higher income raises demand at every price, shifting the curve right. Changes in the price of tea itself only cause movements along the curve. A rise in the cost of tea leaves affects supply, not demand.
Did you get it right without looking?
One question tells you little. A timed set on The Fundamentals of Economics shows your real accuracy, how long you take and where you lose marks.
More The Fundamentals of Economics questions
- A mobile phone retailer in Pune sells 1,000 handsets a month at an average price of ₹10,000. After a 5% price cut, sales rise to 1,100 hands…
- A firm has a fixed budget and chooses between machine X and machine Y, which cannot both be bought. Machine X is chosen. Machine Y would hav…
- A linear demand function for a product is Q = 120 − 4P, where Q is quantity in units and P is price in rupees. At what price will the quanti…
- Which of the following statements is a normative economic statement?
- In a traditional economy, such as a remote tribal community, how are the basic economic problems of what, how and for whom to produce mainly…
- Which event would, other things being equal, lead to a fall in the equilibrium price of wheat flour with an increase in the equilibrium quan…