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Explain the Effect of the Following Changes on Equilibrium Price

question 132

Essay

Explain the effect of the following changes on equilibrium price and quantity of a commodity:
(a) increase in average incomes.
(b) increase in population.


Definitions:

Net Cash Flow

The amount of cash generated or spent over a specific period, typically the result of operating, investing, and financing activities.

Present Value

The value today of a future payment, or series of future payments, discounted at some appropriate interest rate.

Earnings Rate

The rate at which an investment or savings account generates income, usually expressed as a percentage of the principal.

Compound Interest

Interest calculated on the initial principal, including all of the accumulated interest from previous periods on a deposit or loan.

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