Shifts in Demand and Supply for New Equilibrium

Steps:

• Equilibrium changes when demand or supply curves shift due to external factors.
• For a normal good, rising income shifts demand right, increasing equilibrium price and quantity.
• Falling complement price also shifts demand right, raising both price and quantity.
• Rising supply shifts supply right, lowering price but raising quantity; combined shifts in option C create a new equilibrium.

Why C is correct:

• Per the supply-demand model, increased income and lower complement prices shift demand right, while higher supply shifts supply right, moving to a new intersection point.

Why the others are wrong:

• A: Both leftward shifts lower quantity and raise price, not matching a typical diagram's new equilibrium.
• B: Both rightward shifts raise quantity but ambiguously affect price, failing to fit specific diagram outcomes.
• D: Income fall shifts demand left (lowering price/quantity); supply fall shifts left (raising price/lowering quantity), netting unclear shifts unlike the diagram.

Final answer: C