In the following question you are asked to determine,other things equal,the effects of a given change in a determinant of demand or supply for product X upon (1)the demand (D)for,or supply (S)of,X; (2)the equilibrium price (P)of X;and (3)the equilibrium quantity (Q)of X. Refer to the given information.An increase in income,if X is a normal good,will:

Question

Quizplus · Accepted Answer

An increase in income, if X is a normal good, will lead to an increase in the demand for X (D) as people have more disposable income to spend on the good. This increase in demand will result in an increase in the equilibrium price (P) of X as suppliers produce more at the higher price. However, the increase in demand will also lead to an increase in the equilibrium quantity (Q) of X as suppliers meet the higher demand at the higher price. Therefore, choice A is the correct answer.

In the Following Question You Are Asked to Determine,other Things