The income effect of an increase in the price of backpacks (a normal good) is a(n)
a. decrease in the demand for backpacks
b. decrease in the quantity demanded of backpacks
c. increase in the demand for backpacks
d. increase in the quantity demanded of backpacks
e. new demand curve because everything else is no longer constant
B
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Donna owns the only dog grooming salon on Lonely Island. The figure above shows the dog grooming market. Donna is a single-price monopoly that maximizes profit by charging ________ per grooming and producing ________ groomings per day
A) $30; 8 B) $20; $8 C) $20; $12 D) None of the above answers is correct.
Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?
A) The shortage will cause a decrease in the equilibrium price of digital music players. B) The demand for digital music players is greater than the supply of digital music players. C) Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price. D) The price of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease.