Other Things Held Constant,the Lower the Price of a Good

question 137

Multiple Choice

Other things held constant,the lower the price of a good:

• A) the lower the demand.
• B) the higher the demand.
• C) the greater the consumer surplus.
• D) the lower the consumer surplus.

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Definitions:

Income And Substitution Effects

The changes in quantity demanded of a good due to a change in income (income effect) or a change in price leading consumers to substitute one good for another (substitution effect).

Demand Curve

A visual chart that illustrates how the quantity of a product demanded by customers varies according to its price.

Consumer Equilibrium

The point at which the satisfaction obtained from a good or service equals the price paid for it, maximizing utility.

Substitution Effect

The change in consumption resulting from a change in relative prices, leading consumers to substitute away from higher-priced goods towards lower-priced ones.