Suppose That We Illustrate Demand and Supply with Quantity on the Horizontal

question 33

Multiple Choice

Suppose that we illustrate demand and supply with quantity on the horizontal axis and income on the vertical axis. Let demand be a function of price and income, Qd (P, I) . Which of the following statements is true?

• A)A change in income will cause a shift in the demand curve.
• B)A change in income level is represented by a movement along the demand curve.
• C)Income is treated as an exogenous variable in the graphical analysis.
• D)Price and income together must change in order to create a shift in the demand curve.

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Definitions:

Producer Surplus

The difference between the actual amount that producers receive from selling a good and the minimum amount they would accept to produce that good.

Supply Curve

A graph that shows the relationship between the price of a good and the quantity of the good that producers are willing to sell.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total benefit to society from the production and consumption of goods and services.

Transplant Organs

Organs removed from one body and placed in another's body for the purpose of replacing a missing or defective organ.