Question

Consider the market for tourist or vacation hotel and motel rooms in the vicinity of Disneyland...

Consider the market for tourist or vacation hotel and motel rooms in the vicinity of Disneyland (in Anaheim, California), a normal good. Assume this market is approximately perfectly competitive.  

What happens if there’s a recession, and incomes of consumers fall?

There's an increase in demand

There's an increase in supply

There's a decrease in demand

There's a decrease in supply

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Answer #1

Because it is a normal good increase in income causes the increase in demand and if there is a decrease in income there would be decrease in demand and the demand curve shift to the left

Therefore (c) is a decrease in demand is the answer to this question

However the incomes of the people decrease and the good is normal, then there is decrease in in demand and not increase and also the consumers income is related to demand and not supply

Therefore (a,b,d) are wrong

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