The Effect of an Increase in Consumer Income on Equilibrium

question 32

Multiple Choice

The effect of an increase in consumer income on equilibrium price and quantity of Florida orange juice (a normal good) is

• A)to increase equilibrium price and quantity
• B)to decrease equilibrium price and quantity
• C)to increase equilibrium price and decrease equilibrium quantity
• D)to increase equilibrium quantity and decrease equilibrium price
• E)that equilibrium price and quantity remain constant

Understand the factors that improve bargaining position when contracting with a supplier.

Comprehend the strategic advantages in sequential and non-strategic bargaining games.

Identify the significance of disagreement value in bargaining.

Grasp how outside options influence bargaining power.

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Definitions:

Natural Monopolists

Entities that dominate a market due to inherent advantages, such as economies of scale, which prevent efficient competition.

Average Total Costs

The total of all costs associated with production divided by the number of units produced, giving the cost per unit.

Marginal Cost

The additional expense required to produce or supply one extra unit of a product.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and loan payments.