Question

10.We're considering what happens in the market for PS4's today. Consumers make less money income now. Demand for PS4’s will____Supply_____Equilibrium Price____

Equilibrium Quantity

Answer 1

Answer :

A decrease in the money income of the consumers will lead to a decrease in demand, since with lower income, consumption decreases and thus demand will decrease.

A decrease in money income of the consumers have no impact on the sellers, thus the supply curve remains unchanged.

Thus demand decreases meaning that it shifts to the left, and supply curve remains unchanged. Thus the new equilibrium point (that is the intersection point of the demand and supply curve) results in a lower equilibrium price and lower equilibrium quantity.

Thus to sum it up :

Demand : Decreases

Supply : Unchanged

Equilibrium price : Decreases

Equilibrium quantity : Decreases