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In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for,or supply (S) of,X; (2) the equilibrium price (P) of X;and (3) the equilibrium quantity (Q) of X. Refer to the given information.If X is an inferior good,a decrease in income will:
A) decrease D,decrease P,and decrease Q.
B) decrease D,decrease P,and increase Q.
C) increase S,decrease P,and increase Q.
D) increase D,increase P,and increase Q.
Inferior Good
A type of good for which demand decreases as the income of consumers increases, in contrast to a normal good.
Equilibrium Price
The cost at which the amount of a product or service consumers want to buy matches the amount that manufacturers are willing to sell.
Equilibrium Quantity
The quantity of goods or services that is supplied is exactly equal to the quantity demanded at the equilibrium price.
- Analyze the repercussions of adjustments in the drivers behind demand and supply on the market's balance.
- Employ economic concepts to assess the consequences of technological developments and changes in regulations on the market environment.
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Learning Objectives
- Analyze the repercussions of adjustments in the drivers behind demand and supply on the market's balance.
- Employ economic concepts to assess the consequences of technological developments and changes in regulations on the market environment.
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