In a Recession,consumers Have Less Income to Spend

question 103

Multiple Choice

In a recession,consumers have less income to spend.As a result,if dining out is a normal good,then which of the following would happen to the demand curve for dining out?

• A)The effect on the demand curve is unknown.
• B)The demand curve would not shift,but the price of dining out would fall.
• C)The demand curve would shift leftward.
• D)The demand curve would not shift,but the price of dining out would rise.
• E)The demand curve would shift rightward.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in a balance between production and consumption.

Equilibrium Quantity

The volume of commodities or services provided that coincides with the volume requested at the price of market balance.

Normal Good

A normal good is one whose demand increases when consumers' incomes increase and falls when incomes decrease, all else being equal.

Equilibrium Quantity

The quantity of a good or service at which supply and demand are balanced in a market.