📚 Learning Guide
Market Demand and Equilibrium Changes
hard

If the demand curve for a product shifts to the right due to an increase in consumer income, what is the likely effect on the equilibrium quantity in the market?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

It will decrease

B

It will remain unchanged

C

It will increase

D

It will fluctuate unpredictably

Understanding the Answer

Let's break down why this is correct

Answer

When the demand curve for a product shifts to the right, it means that more people want to buy that product at every price level, which often happens when consumer income increases. This higher demand leads to a situation where, at the original price, there are more buyers than the available quantity of the product. As a result, sellers will notice that they can sell more and may decide to raise their prices. This price increase encourages producers to supply more of the product, ultimately leading to a higher equilibrium quantity in the market. For example, if more people can afford to buy organic apples due to a rise in income, the grocery store will sell more apples, increasing the quantity available in the market.

Detailed Explanation

When people have more money, they want to buy more things. Other options are incorrect because Some might think that more demand means less supply; It's a common mistake to think that demand changes don't affect quantity.

Key Concepts

demand curve
equilibrium quantity
market analysis.
Topic

Market Demand and Equilibrium Changes

Difficulty

hard level question

Cognitive Level

understand

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