BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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fewer customers and less productivity.
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more customers and more productivity.
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fewer customers and more productivity.
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more customers and less productivity.
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Detailed explanation-1: -In economics, a luxury good is a good for which demand increases more than proportionally as income rises. Luxury goods are said to have high income elasticity of demand. In other words, as people become wealthier, they will buy more and more of the luxury good.
Detailed explanation-2: -As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.
Detailed explanation-3: -What occurs when the price of a product is higher than the price at which supply equals demand? Surplus. What is the simplest solution to a surplus? The simplest solution to a surplus is to slowly lower the price to the market equilibrium point.
Detailed explanation-4: -The substitution effect occurs when consumers react to an increase in a good’s price by consuming less of that good and more of other goods.