For this question,assume that expectations of P and A are correct.Now suppose that there is a 4% increase in A.Given this information,which of the following will occur?
A)the PS relation will shift up by 4%.
B)the WS relation will shift up by less than 4%.
C)the WS relation will shift down by 4%.
D)the PS relation will shift down by 4%.

Question

Quizplus · Accepted Answer

The PS relation will shift up by 4% because the increase in A will lead to an increase in the demand for P, which will in turn lead to an increase in the price of P.

For This Question,assume That Expectations of P and a Are