If Producers Must Receive a Higher Price to Be Induced

question 285

Multiple Choice

If producers must receive a higher price to be induced to produce any quantity, we can conclude that

• A) supply decreased.
• B) demand decreased.
• C) both supply and demand increased.
• D) demand increased.

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Definitions:

Demand Elasticity

A metric for assessing the reaction of a good's demanded quantity to its price adjustments.

Income Elasticity

A measure of how the demand for a good or service changes with a change in consumers' income.

Normal Good

A type of good for which demand increases when consumer income rises, and decreases when consumer income decreases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to normal goods.