Suppose Both the Demand for and Supply of Salsa Increase

question 156

Multiple Choice

Suppose both the demand for and supply of salsa increase (although not necessarily by the same amount) .What can we conclude about changes in the price and quantity of salsa?

• A)Both the price and quantity increase.
• B)The price increases but the change in the quantity cannot be determined.
• C)The quantity increases but the change in the price cannot be determined.
• D)Both the price and quantity decrease.

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Definitions:

Consumer Equilibrium

Consumer Equilibrium is the state at which the allocation of goods and services by a consumer ensures the maximum utility given their budget constraints.

Utility Maximization

An economic principle that suggests individuals seek to achieve the highest satisfaction possible with their available resources.

Consumer Equilibrium

A condition where the allocation of goods and services among consumers in such a way that the utility derived from each is maximized.

Total Utility

The overall satisfaction or happiness a consumer receives from consuming a certain amount of goods or services.