In one particular month 1.2 million kilos of potatoes are sold at £1.20 per kilo

Question

In one particular month 1.2 million kilos of potatoes are sold at £1.20 per kilo. In the next month 1.5 million kilos are sold at £1.40 per kilo.

Which of the following explanations is consistent with this observation (there may be more than one or none at all)?

(a) The price of carrots has risen, and carrots are a close substitute for potatoes.

(b) The price of fish has risen, and fish is a complement to potatoes.

(c) Bad weather has reduced the potato crop.

(d) Consumer incomes have risen, and potatoes are an inferior good.

(e) Newspapers have reported that potatoes have health-giving properties, and this has generated a shift of tastes towards potatoes.

Explanation / Answer

Both a and e is consistent with given situation because demand for good increases when price of substitute goods increases and also the advertisement of health benefits of a good increases it's demand because people will prefer more quantity of that good.

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