Answer to Question #316280 in Microeconomics for Nobuhle Ledima

Question

Illustrate and explain how an increase in household income will affect the equilibrium price and quantity in the market for mobile data

Answer 1

Answer.

The increase in household income will have an impact on quantity of mobile data and the equilibrium price. The reason for the Change is because of the positive income effect implying that an increase in demand rises whereas decrease in income demand appears to fall. For special cases of inferior goods,effect of income is negative when there is increase in demand for inferior services and goods.