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JAMB Economics 2007 Question 8

Question 8

Theory of Demand

When the demand for a good increases owing to an increase in income, it means that

  1. A.there is an increase in quantity demanded
  2. B.inflation has taken place
  3. C.demand has exceeded supply
  4. D.there is an increase in demand
Show the answer and explanation

Answer: D (there is an increase in demand)

Explanation

A rise in income shifts the demand curve to the right; this is called an increase in demand (a change in quantity demanded is caused only by the good's own price).