Which of the following statements about the factors that influence demand is true?
A)As the price of close substitutes increases, demand for a product increases.
B)As real consumer income increases, demand for a product increases.
C)Changing consumer tastes have little impact on demand for a product.
D)As the availability of close substitutes increases, the demand for a product increases.

Question

Quizplus · Accepted Answer

As real consumer income increases, people have more money to spend and are likely to purchase more of a product, thereby increasing demand. This is a fundamental principle in economics known as the income effect. A is incorrect because as the price of close substitutes increases, demand for a product decreases. C is incorrect because changing consumer tastes can have a significant impact on demand for a product. D is incorrect because as the availability of close substitutes increases, the demand for a product decreases. This is known as the substitution effect.

Which of the Following Statements About the Factors That Influence