Which of the following would cause both the equilibrium price and equilibrium qu

ID: 1186748 • Letter: W

Question

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume barley is an inferior good) to increase?

a. an increase in consumer income b. a drought that sharply reduces barley output c. a decrease in cunsumer income d. unusually good weather that results in a bymper crop of barley a. an increase in consumer income b. a drought that sharply reduces barley output c. a decrease in cunsumer income d. unusually good weather that results in a bymper crop of barley

Explanation / Answer

C Explanation : All the people who can not afford superior goods use barley. If consumer income increases they will gradualy shift to superior goods thus decreasing the barley demand.. In a drought supply decreases so price increases but equilibrium quantity decreases as well.. Bumper crop increases suplly and decreses prices. Decrease in consumer income causes those people who did not use barley earlier to use it now. So this increses DEMAND causing equilibrium price and quantity both to increase.

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Which of the following would cause both the equilibrium price and equilibrium qu

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