Suppose the Income of consumers in a market increase. How will this effect the equilibrium price of the commodity, assuming that it is a normal good?

(A) There is excess demand at the existing price.
(B) Rising price leads to contraction in demand and expansion in supply and a new equilibrium price is attained, which is higher than the initial price.
(C) The demand curve shifts rightward.
(D) There is upward pressure on the price and price starts rising.

Choose the correct answer from the options given below:

(C), (A), (D), (B)

The correct answer is Option (3) → (C), (A), (D), (B)

• (C) Income of consumers increases → for a normal good, demand increases, causing the demand curve to shift rightward.

• (A) At the existing price, the new demand exceeds supply → there is excess demand in the market.

• (D) This excess demand puts upward pressure on the price → price starts rising.

• (B) As price rises, demand contracts and supply expands, until a new equilibrium is established at a higher price.

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