Which of the Following Would Result in an Increase in Equilibrium

question 137

Multiple Choice

Which of the following would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

• A) an increase in supply and demand
• B) an increase in supply and a decrease in demand
• C) a decrease in supply and an increase in demand
• D) a decrease in supply and demand

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Definitions:

APC

The acronym for Average Propensity to Consume, which measures the fraction of income that households spend on goods and services rather than saving.

Disposable Income

The cash pile households can utilize for their spending and savings needs after income taxes are handled.

MPC

Marginal Propensity to Consume, which represents the ratio of change in consumer spending to a change in household income.

MPS

The marginal propensity to save, which is the proportion of an increase in income that is saved rather than spent on consumption.