Asked by Alianna Jiminian on May 02, 2024
Verified
Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped,an increase in income will result in:
A) an increase in equilibrium price and quantity.
B) a decrease in equilibrium price and an increase in equilibrium quantity.
C) a decrease in both equilibrium price and quantity.
D) an increase in equilibrium price and a decrease in equilibrium quantity.
Equilibrium Price
The equilibrium price in the market where the supply of goods matches the demand for goods.
Equilibrium Quantity
The quantity of goods or services supplied is exactly equal to the quantity demanded at the market price.
- Acquire knowledge of how changes in income influence the demand for both normal and inferior goods.
Verified Answer
JC
Jimmy CostelloMay 09, 2024
Final Answer :
A
Explanation :
An increase in income will shift the demand curve to the right, leading to an increase in equilibrium price and quantity due to the positively sloped supply curve. This is because consumers will be willing and able to pay a higher price for the good at every quantity.
Learning Objectives
- Acquire knowledge of how changes in income influence the demand for both normal and inferior goods.