assume that potatoes are an inferior good. which of the following would cause both the equilibrium price and…
assume that potatoes are an inferior good. which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?\na. a freeze that sharply reduces potato output\nb. a decrease in consumer income\nc. a technological advancement that results in a bumper crop of potatoes\nd. an increase in consumer income
Answer
Brief Explanations:
For an inferior good like potatoes, when consumer income increases, the demand for inferior goods decreases. A decrease in demand shifts the demand curve to the left, leading to a lower equilibrium price and lower equilibrium quantity. Option A reduces supply and increases price. Option B increases demand for inferior goods. Option C increases supply and lowers price but increases quantity. Option D is correct as an increase in consumer income decreases demand for inferior - good potatoes, causing both equilibrium price and quantity to fall.
Answer:
D. an increase in consumer income