Which one of the following is NOT a basic option for altering demand in a competitive market?

• A. Imposing a production quota
• B. Changing consumer preferences
• C. Adjusting the price of the good
• D. Altering the income of consumers

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of demand in a competitive market. Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices, holding other factors constant.
2. Step 2: Identify the basic factors that can alter demand. These typically include changes in consumer preferences, changes in consumer income, and changes in the price of the good itself (which affects quantity demanded along the demand curve).
3. Step 3: Recognize that imposing a production quota is a supply-side intervention, not a demand-side change. A production quota limits the quantity producers can supply, affecting supply rather than demand.
4. Step 4: Compare each option to the definition of demand shifters: Changing consumer preferences shifts demand; adjusting the price of the good changes quantity demanded (movement along the demand curve); altering consumer income shifts demand; imposing a production quota does not directly affect demand but restricts supply.
5. Step 5: Conclude that the option 'Imposing a production quota' is NOT a basic option for altering demand because it is a supply control mechanism.