The Income of Consumers Increases

question 89

Multiple Choice

The income of consumers increases. and the wage rate in the DVD industry increases. As a result

• A)the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
• B)the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply.
• C)the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
• D)the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.

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Definitions:

Financial Crisis

A situation where financial assets suddenly lose a significant part of their nominal value, often leading to widespread economic disruption and possibly a banking crisis.

Behavioral Economics

A field of economics that studies the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

2007-2009 Recession

A severe global economic downturn sparked by the financial crisis, marked by high unemployment rates and significant declines in economic activity worldwide.

Neoclassic Economist

A school of thought in economics that focuses on the determination of goods, outputs, and income distributions in markets through supply and demand.