Which of These Statements About the Factors That Influence Demand

question 173

Multiple Choice

Which of these statements about the factors that influence demand is true?

• A) As the availability of close substitutes increases, the demand for a product increases.
• B) As real consumer income increases, the demand for a product increases.
• C) As the price of close substitutes increases, the demand for a product declines.
• D) Changing consumer tastes have little impact on the demand for a product.
• E) As real consumer income decreases, the demand for a product increases.

---

Definitions:

Private Markets

Markets where transactions occur directly between parties without public exchange involvement, often characterized by less regulation.

Socially Optimal Level

A state of resource allocation where the benefits to society are maximized, considering all externalities.

Excise Tax

A tax levied on specific goods or services, such as alcohol, tobacco, and gasoline, usually to discourage their use or to generate revenue.

Negative Externality

A cost that affects a party who did not choose to incur it, often associated with the consumption or production of goods and services.