Which of the following factors would cause a rightward shift in the market demand curve for a normal good? 1. Increase in the price of a substitute good. 2. Decrease in the income of consumers. 3. Increase in the number of consumers.

Correct Option The correct option is 1 and 3 only. Explanation A rightward shift in the market demand curve represents an increase in demand, meaning consumers are willing to purchase a larger quantity of the good at every price level. This shift is caused by changes in non-price determinants such as consumer income, prices of related goods, tastes, and the size of the population. Statement-wise Analysis - Statement 1 is Correct: A substitute good is a product that can be used in place of another (e.g., tea and coffee). If the price of a substitute good increases, consumers will switch their consumption to the good in question because it has become relatively cheaper. This increases the demand for the good, causing a rightward shift in its demand curve. - Statement 2 is Incorrect: For a "normal good," demand is directly related to consumer income. A decrease in income reduces the purchasing power of consumers, leading to a decrease in the quantity demanded at all price levels. This results in a leftward shift, not a rightward shift, of the demand curve. - Statement 3 is Correct: Market demand is the aggregate of individual demands. An increase in the number of consumers (population growth or market expansion) increases the total quantity demanded at any given price. Consequently, the market demand curve shifts to the right. Key Takeaway: A rightward shift in the demand curve for a normal good is caused by an increase in the price of substitutes, a decrease in the price of complements, an increase in consumer income, favorable changes in preferences, or an increase in the number of buyers.

Which of the following factors would… - NCERT Class 12 Economics MCQ

NCERT Class 12 Economics — Chapter 2: Market Equilibrium

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Which of the following factors would cause a rightward shift in the market demand curve for a normal good?

Increase in the price of a substitute good.
Decrease in the income of consumers.
Increase in the number of consumers.

NCERT textbook question

From NCERT Introductory Microeconomics · Page 78

Options

A1 and 2 only
B1 and 3 only
C2 only
D1, 2 and 3

Did you get this right?

Solution

Correct Option

The correct option is 1 and 3 only.

Explanation

A rightward shift in the market demand curve represents an increase in demand, meaning consumers are willing to purchase a larger quantity of the good at every price level. This shift is caused by changes in non-price determinants such as consumer income, prices of related goods, tastes, and the size of the population.

Statement-wise Analysis

Statement 1 is Correct: A substitute good is a product that can be used in place of another (e.g., tea and coffee). If the price of a substitute good increases, consumers will switch their consumption to the good in question because it has become relatively cheaper. This increases the demand for the good, causing a rightward shift in its demand curve.
Statement 2 is Incorrect: For a "normal good," demand is directly related to consumer income. A decrease in income reduces the purchasing power of consumers, leading to a decrease in the quantity demanded at all price levels. This results in a leftward shift, not a rightward shift, of the demand curve.
Statement 3 is Correct: Market demand is the aggregate of individual demands. An increase in the number of consumers (population growth or market expansion) increases the total quantity demanded at any given price. Consequently, the market demand curve shifts to the right.

Key Takeaway: A rightward shift in the demand curve for a normal good is caused by an increase in the price of substitutes, a decrease in the price of complements, an increase in consumer income, favorable changes in preferences, or an increase in the number of buyers.

Your note

More from Chapter 2: Market Equilibrium

In the context of market equilibrium, what happens when the market demand curve shifts rightward while the supply curve remains unchanged ?

easy

In a market with free entry and exit, if the demand curve shifts to the left: Statements: 1. Firms will enter the market to capture the lower price. 2. The market price will temporarily fall below the minimum average cost. 3. The supply will increase until the price returns to the minimum average cost. Which of the statements given above is/are correct?

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What is the primary consequence of a price ceiling accompanied by rationing?

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With reference to the supply of labour by an individual, consider the following statements: 1. An increase in wage rate always leads to an increase in the supply of labour hours by an individual. 2. At high wage rates, the income effect may dominate the substitution effect, leading to a decrease in labour supply. 3. The individual labour supply curve can be backward bending. Which of the statements given above is/are correct?

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In a perfectly competitive market, if the market price is above the equilibrium price, there will be:

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