What will be the effect on equilibrium price and equilibrium quantity when income increases in ...........

Economics (CUET) Consumer Behaviour and Demand

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What will be the effect on equilibrium price and equilibrium quantity when income increases in case of normal goods?

Both equilibrium price and quantity fall

Both equilibrium price and quantity rise

Equilibrium price rises and quantity falls

Equilibrium price falls and quantity rises

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Explanation:

Option (2) is correct.
Explanation: Normal goods are those goods whose demand rises with rise in income and falls with fall in income. When income increases in case of normal goods, then demand rises and hence demand curve shifts to the right. Hence, equilibrium price and equilibrium quantity both rise.