If the Demand for a Good Increases When People's Incomes

question 251

Multiple Choice

If the demand for a good increases when people's incomes increase,

• A) the good is an inferior good.
• B) the law of demand is violated.
• C) the good's demand curve must be slope upward.
• D) the good is a normal good.
• E) the good is a substitute good for an inferior good.

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that suppliers are willing to offer for sale, holding all else constant.

Partial Equilibrium

Partial equilibrium is an analysis of the equilibrium position of a single market or sector within the wider economy, without considering interactions with other markets or sectors.

Substitutes

Two goods for which an increase in the price of one leads to an increase in the quantity demanded of the other.

General Equilibrium Analysis

Simultaneous determination of the prices and quantities in all relevant markets, taking feedback effects into account.