If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?
Correct answer: B. not change
- A. increase
- B. not change
- C. decrease
- D. shift
Explanation
Doubling both income and all relevant prices leaves real income and relative prices unchanged, so the consumer's affordable choices and likely demand remain unchanged. This assumes ordinary consumer behaviour without money illusion.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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