The income of consumers increases. and the wage rate in the DVD industry increases. As a result
A)the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
B)the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply.
C)the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
D)the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.

Question

Quizplus · Accepted Answer

An increase in consumer income typically increases demand for normal goods like DVDs, while an increase in wage rates increases production costs, reducing supply. This leads to an increase in price, but the quantity sold depends on the relative magnitude of demand and supply changes.

The Income of Consumers Increases