Dana received good news from her parents with the increase of her school allowance, so she spends more money on pretzels every week. How can you explain this with a graph?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter4: The Market Forces Of Supply And Demand
Section4.2: Demand
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Dana received good news from her parents with the increase of her school allowance, so she spends more money on pretzels every week. How can you explain this with a graph?

This is an example of a shift in Dana's demand curve. She has a permanent increase in her income, so she begins to buy more, even though the prices haven't dropped.

 

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