When the Demand for Good a Increases

question 79

Multiple Choice

When the demand for good A increases,

• A)the equilibrium price and equilibrium quantity will increase.
• B)the equilibrium price will rise,but the equilibrium quantity will decrease.
• C)the equilibrium price and equilibrium quantity will decrease.
• D)the equilibrium price will decrease,but the equilibrium quantity will increase.
• E)a surplus will result.

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Definitions:

Autonomous Consumption

Consumption spending that occurs even when income is zero, representing the basic level of consumption necessary for survival.

Disposable Income

The monetary provision for households post the calculation of income taxes dedicated to saving and spending.

Consumption

The use of goods and services by households, which is a primary component of the economy and influences economic growth.

Induced Consumption

Refers to the portion of consumer spending that increases or decreases with disposable income.