Which of the following factors can both increase and decrease demand depending on whether the good is normal or inferior?

• A. A decrease in the price of the good itself
• B. A change in consumer tastes that favors the good
• C. An increase in the number of buyers
• D. Changes in consumer income

Answer: (D)

Verified step by step guidance

1. Understand the difference between normal and inferior goods: A normal good is one for which demand increases as consumer income rises, while an inferior good is one for which demand decreases as consumer income rises.
2. Identify the factors that affect demand: These include the price of the good itself, consumer tastes, the number of buyers, and consumer income.
3. Analyze how a change in consumer income affects demand: For a normal good, an increase in income leads to an increase in demand; for an inferior good, an increase in income leads to a decrease in demand.
4. Compare this with other factors: A decrease in the price of the good itself always increases demand (law of demand), a change in consumer tastes that favors the good always increases demand, and an increase in the number of buyers always increases demand.
5. Conclude that only changes in consumer income can both increase and decrease demand depending on whether the good is normal or inferior.