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An increase in income typically leads to an increase in the demand for normal goods, including bus rides, as people can afford to use public transportation more often or may choose it over other, more expensive options. This rise in demand would shift the demand curve to the right, resulting in higher equilibrium prices and an increased quantity of bus rides demanded. However, if bus rides are considered inferior goods, the effect could be the opposite, leading to a decrease in demand, lower prices, and a reduced quantity demanded.

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How does an increase in supply affect the market equilibrium when the supply curve shifts to the right?

When the supply curve shifts to the right, it means there is an increase in supply. This leads to a lower equilibrium price and a higher equilibrium quantity in the market.


Is the degree of responsive with which quantity demanded changes due to changes in the price of a product?

Yes. Imagine you are in the market to buy a sports car. A $100 increase in price is not likely to affect the quantity you will demand. However, if you are in the market for bananas a $100 increase in price will definitely affect the quantity you will demand.


For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?

For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?


How do price changes affect equilibrium?

Price changes affect the equilibrium price and quantity by Serving as a tool for distributing goods and services.


1 How does consumer perception of the product value can set the ceiling for prices?

Consumers do not set a price ceiling on goods. Only the government can set a price ceiling. However, the consumer perception of a good's value does affect the equilibrium price and quantity demanded. This is the price that the good is sold at and how many of the good is demanded at that price.

Related Questions

How is price and quantity demanded related?

As a general rule, as the price level increases the quantity demanded will decrease, and vice versa. If the good or service is inelastic (e.g. a necessity or necessary to survival) a change in price will affect the quantity in a less than proportionate manner. That is, if there is a increase in price, the quantity demanded will increase only a small (if any) amount. If the good or service is elastic (e.g. luxury items) a change in price will affect quantity demanded more than proportionately. So if the the price increases, quantity demanded will decrease a large (more than proportionate) amount.


How does an increase in supply affect the market equilibrium when the supply curve shifts to the right?

When the supply curve shifts to the right, it means there is an increase in supply. This leads to a lower equilibrium price and a higher equilibrium quantity in the market.


Is the degree of responsive with which quantity demanded changes due to changes in the price of a product?

Yes. Imagine you are in the market to buy a sports car. A $100 increase in price is not likely to affect the quantity you will demand. However, if you are in the market for bananas a $100 increase in price will definitely affect the quantity you will demand.


For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?

For a given increase in supply the slope of both demand curve and supply curve affect the change in equilibrium quantity Is this statement true or false Explain with diagrams?


How do prices affect equilibrium?

Price changes affect the equilibrium price and quantity by Serving as a tool for distributing goods and services.


How do price changes affect equilibrium?

Price changes affect the equilibrium price and quantity by Serving as a tool for distributing goods and services.


How do unions affect the natural rate of unemployment?

Unions may affect the natural rate of unemployment via the effect on insiders and outsiders. Because unions raise the wage above the equilibrium level, the quantity of labor demanded declines while the quantity supplied of labor rises, so there is unemployment.


1 How does consumer perception of the product value can set the ceiling for prices?

Consumers do not set a price ceiling on goods. Only the government can set a price ceiling. However, the consumer perception of a good's value does affect the equilibrium price and quantity demanded. This is the price that the good is sold at and how many of the good is demanded at that price.


How can one determine the elasticity of a product or service?

One can determine the elasticity of a product or service by analyzing how changes in price affect the quantity demanded. If a small change in price leads to a large change in quantity demanded, the product or service is considered elastic. If the change in price has little effect on quantity demanded, the product or service is considered inelastic.


How does a change in price affect consumer behavior in terms of income vs substitution effect?

A change in price can affect consumer behavior through two main effects: the income effect and the substitution effect. The income effect refers to how a change in price affects the purchasing power of consumers' income, leading to changes in the quantity demanded of a good. The substitution effect, on the other hand, refers to how consumers may switch to alternative goods or services when the price of a particular good changes. Overall, a decrease in price typically leads to an increase in quantity demanded due to both effects, while an increase in price usually results in a decrease in quantity demanded.


How does supply shock affect equilibrium price and quantity?

Because supply shock is a sudden change of a good. Meaning if it is a negative shock, the equilibrium price and quantity of course will go down. And if it is a positive shock, vice versa of negative.


Why market equilibrium is said to be highly unstable one?

cause in real life market never remains at equilibrium, many factors affect market price and quantity