Ceteris paribus, when an increase in consumer income causes demand to increase:

Question

Ceteris paribus, when an increase in consumer income causes demand to increase: equilibrium price and quantity both rise. equilibrium price and quantity both fall. equilibrium price rises and equilibrium quantity falls. equilibrium price falls and equilibrium quantity rises. The equilibrium price of a dozen roses is and the equilibrium quantity of roses is dozen. $25; 200 $50; 300 $50; 400 $75; 400 A price of $75 per dozen roses results in a of dozen roses. shortage; 100 shortage; 200 surplus; 100 surplus; 200 A price of $25 per dozen roses results in a of dozen roses. shortage; 100 shortage; 200 surplus; 100 surplus; 200

Explanation / Answer

3. b. $ 50; 300

Equilibrium price and quantity is determined where demand of good is equal to its supply. In the above diagram, demand and supply curve intersect at price of $ 50 and quantity 300 units.

4. d. surplus; 200

At price of $ 75, quantity supplied is greater than quantity demanded of roses due to this there is surplus in the market. Surplus = 400 - 200 = 200 units

5. b. shortage; 200

At price of $ 25, quantity demanded is greater than quantity supplied due to this there is excess demand and causes shortage of goods in the market. Shortage = 400 - 200 = 200 units

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