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Why might an increase in income result in a decrease in demand?
Wiki User
∙ 13y ago
The Giffen's paradox explains this theory very well .When a person's income rises his purchasing power obviously rises.This leads him to substitute his earlier consumption commodities (inferior goods in the theory) to something more superior. In this case when the income rises the demand for inferior goods falls. But this also proves that when income rises the demand for superior goods also rises
Wiki User
∙ 13y ago
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If A decrease in price of a product will result in?
increase in demand and decrease in supply.
Why can the law of demand apply only in a free market economy?
demand refers to need for a resource. the law of demand states that an increase in demand will result in an increase in price, ceteris paribus. in a free market economy, sellers are free to increase prices when demand increases. in a closed economy prices are controlled by government. an increase or decrease in demand doesn't affect prices.
Why are all PEDs negative in economics?
The formula for PED is (% change in quantity demand)/(% change in price). An increase in one will always result in a decrease in the other, and a decrease in one will also result in an increase in the other. therefore at all times in the equation there will be a positive and a negative. hence making the result always negative. your welcome
What will happen if Aggregate demand increases and aggregate supply decreases?
An increase in aggregate demand and a decrease in aggregate supply will result in a shortage: there will be more goods and services demanded than that which is being produced.
How would it be possible to observe a decrease in both the equilibrium price and quantity in the market at the same time?
A fall in demand will result in the decrease of both equilibrium price and quantity. A fall in demand( a leftward shift in the demand curve) will result in the decrease of both equilibrium price and quantity.
If A decrease in price of a product will result in?
increase in demand and decrease in supply.
Why an increase in price does not result in a decrease in demand?
Think about it--when something goes up in price do you want to buy it more? No.
Why can the law of demand apply only in a free market economy?
demand refers to need for a resource. the law of demand states that an increase in demand will result in an increase in price, ceteris paribus. in a free market economy, sellers are free to increase prices when demand increases. in a closed economy prices are controlled by government. an increase or decrease in demand doesn't affect prices.
How would a reduction in production cost look like on a supply-demand diagram?
Additional details to the question: What would be the result? increase in supply? decrease in demand? etc...
Why are all PEDs negative in economics?
The formula for PED is (% change in quantity demand)/(% change in price). An increase in one will always result in a decrease in the other, and a decrease in one will also result in an increase in the other. therefore at all times in the equation there will be a positive and a negative. hence making the result always negative. your welcome
What will happen if Aggregate demand increases and aggregate supply decreases?
An increase in aggregate demand and a decrease in aggregate supply will result in a shortage: there will be more goods and services demanded than that which is being produced.
What will happen if Aggregate demand increases and aggregate supply increases?
An increase in aggregate demand and a decrease in aggregate supply will result in a shortage: there will be more goods and services demanded than that which is being produced.
How would it be possible to observe a decrease in both the equilibrium price and quantity in the market at the same time?
A fall in demand will result in the decrease of both equilibrium price and quantity. A fall in demand( a leftward shift in the demand curve) will result in the decrease of both equilibrium price and quantity.
Supply decrease and demand is constant?
If the supply decrease and demand is constant, it will result into higher prices for the good. Ideally, this will automatically make the demand higher than market supply which creates scarcity.
If the demand for a product remains the same and the supply increase what will happen to the equilibrium price?
If there is an increase in supply, the supply curve will be shifted to the right. This leads to a decrease in the equilibrium price and an increase in equilibrium quantity. This is easy to see if you draw it out.
How can federal government affect fiscal policy?
Generally speaking the fiscal policies of the US Federal government are related to the monetary policies of the US Federal Reserve System. With that said, US fiscal policies of the Federal government can affect the economic situation of the US. The Federal government can do the following to influence the US economy, all of which are meant to improve the economy, however, that may not be the intended result. Here are some but not all examples of how the economy of the US can be affected by the Federal government:* Increase or decrease income taxes on personal and corporate income;* Increase or decrease gasoline taxes;* Increase or decrease tariffs;* Increase or decrease capital gains taxes ( part of income taxation );* Increase or decrease social security payments;* increase or decrease certain Medicare prices (costs )* increase or decrease Federal employment policies;* increase or decrease social spending in terms of food stamps as an example; and* Increase or maintain current levels of the national debt ceiling.
Because immigration can result in an increase in the supply of labor immigration can result in what?
A general decrease in wages. - Apex
