Which of the following statements about the factors that influence demand is true?
A)As the availability of close substitutes increases, the demand for a product increases.
B)As real consumer income increases, demand for a product increases.
C)As the price of close substitutes increases, demand for a product declines.
D)Changing consumer tastes have little impact on demand for a product.
E)As real consumer income decreases, demand for a product increases.

Question

Quizplus · Accepted Answer

As real consumer income increases, people have more money to spend and are willing to buy more products, which increases the demand for those products. A, C, and E are incorrect. As the availability of close substitutes increases, people have more options to choose from, which can decrease the demand for a product. As the price of close substitutes increases, demand for a product may increase if it becomes relatively cheaper than the substitute. As real consumer income decreases, people have less money to spend and are less willing to buy products, which decreases the demand for those products. Changing consumer tastes can have a significant impact on demand for a product.

Which of the Following Statements About the Factors That Influence