If Consumer Incomes Go Up and You Are Analyzing the Market

question 31

Multiple Choice

If consumer incomes go up and you are analyzing the market for Harley Davidson motorcycles, the effect on the demand for motorcycles, ceteris paribus, will be

• A) an upward movement along the demand curve for motorcycles.
• B) a downward movement along the demand curve for motorcycles.
• C) a rightward shift in the demand curve for motorcycles.
• D) a leftward shift in the demand curve for motorcycles.

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Definitions:

Surplus

The condition where quantity supplied exceeds quantity demanded, often leading to a decrease in prices.

Price Ceiling

A legally established maximum price that can be charged for a product or service, often set by government to prevent prices from reaching too high levels.

Price Floor

A government-set minimum price at which a product can be sold, aimed to prevent the price from falling too low.

Shortage

A market condition where the quantity demanded of a good exceeds the quantity supplied at the current price, leading to upward pressure on price.