Using Convertible Bonds to Protect Portfolios and Increase Income
Effect of an increase in Income on Price and Quantity
3
Effect of an increase in Income on Price and Quantity • The principal non-Price determinants of Demand are: – Income – Price of substitutes – Price of complements – Tastes and Preferences • Others include – Population – Expected future prices – Consumer confidence • We look at the effect of an increase in Income on equilibrium Price and Quantity for a Normal good.
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Effect of an increase in Income on Price and Quantity. The principal non-Price determinants of Demand are: Income Price of substitutes Price of complements Tastes and Preferences Others include Population Expected future prices Consumer confidence - PowerPoint PPT Presentation
Transcript of Effect of an increase in Income on Price and Quantity
Effect of an increase in Income on Price and Quantity
• The principal non-Price determinants of Demand are:– Income– Price of substitutes– Price of complements– Tastes and Preferences
• Others include– Population– Expected future prices– Consumer confidence
• We look at the effect of an increase in Income on equilibrium Price and Quantity for a Normal good.
S
D0
Price
0Quantity
Q0
P0
Initial Equilibrium
S
D0
D1
Price
0Quantity
Q0 Q1
P0
P1
Final Equilibrium