Question

Other things the same, a decrease in the price level makes consumers feela.more wealthy, so the quantity of goods and services demanded rises. b.less wealthy, so the quantity of goods and services demanded rises. c.more wealthy, so the quantity of goods and services demanded falls. d.less wealthy, so the quantity of goods and services demanded falls.

Answer 1

Answer:

The answer in this case would be option a. or feel more wealthy, so the quantity of goods and services demanded rises.

Explanation:

• As a common consumer psychology,as the price of any good or service decreases,any rational consumer or buyer feels more wealthy compared to before as the purchasing power of the consumers or buyers pertaining to that particular good or services has increased,everything else held constant.
• Purchasing power of any good or service is generally reflected by the purchasing or buying capacity of that good or service with the amount of money that a consumer or buyer has at his or her disposal.
• As the price of any good or service decreases,it becomes cheaper to the consumer,again everything else considering constant.In other words,it increases the purchasing power or capacity of the consumers or buyers.Therefore,the typical consumer or buyer will prefer or demand more of that particular good or service thereby,increasing its quantity demanded due to a price reduction.