John Believes That When the Price of a Good Increases

question 432

Multiple Choice

John believes that when the price of a good increases people will purchase more of the good. This statement is

• A)consistent with the law of demand.
• B)inconsistent with the law of demand.
• C)referring to money prices.
• D)consistent with the law of supply.

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Definitions:

Competitive Equilibrium

A situation in a market where the demand for goods equals the supply of goods, resulting in an equilibrium price and quantity that clears the market.

Utility Function

A function that captures the level of satisfaction or happiness that consumers derive from consuming various combinations of goods and services.

Initial Allocation

The initial distribution of goods, resources, or entitlements among individuals or groups before any trade or market exchange occurs.

Contract Curve

In economics, it is a curve that shows the set of mutually beneficial (efficient) allocations in a trade or exchange situation.