If you produce a normal good and consumers' incomes are expected to increase, you should anticipate a________ price for your product than the current equilibrium price and a ________equilibrium quantity than the current equilibrium quantity.

Question

Quizplus · Accepted Answer

If consumers' incomes are expected to increase, they will have more purchasing power which will increase their demand for normal goods. This increase in demand will lead to a higher equilibrium price and a higher equilibrium quantity. Therefore, the correct choice is A, where the price will be higher and the quantity will be higher.

If You Produce a Normal Good and Consumers' Incomes Are