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Assume that consumers’ incomes and the number of sellers in the market for good A both decrease. Based upon this information we can conclude, with certainty, that equilibrium :
- a)price will increase.
- b)price will decrease.
- c)quantity will increase.
- d)quantity will decrease.
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Assume that consumers’ incomes and the number of sellers in the ...
Explanation:
When both consumer incomes and the number of sellers in the market for good A decrease, it will have an impact on the equilibrium price and quantity of good A. Let us understand how:
Effect on demand:
When consumer incomes decrease, their purchasing power decreases, which means they will demand less of good A. Therefore, the demand curve for good A shifts to the left.
Effect on supply:
When the number of sellers in the market for good A decreases, the supply curve for good A shifts to the left. This means that the quantity of good A supplied at any given price will decrease.
Effect on equilibrium:
When both the demand and supply curves shift to the left, the equilibrium price and quantity of good A will be impacted.
- Equilibrium price: The decrease in demand and supply will put downward pressure on the price of good A, but the impact on price cannot be determined with certainty. Therefore, we cannot conclude that the price will increase or decrease.
- Equilibrium quantity: Since both demand and supply have decreased, the quantity of good A exchanged in the market will also decrease. Therefore, we can conclude with certainty that the equilibrium quantity will decrease.
Conclusion:
Based on the given information, we can conclude that the equilibrium quantity of good A will decrease, but we cannot determine the impact on the equilibrium price with certainty.
When both consumer incomes and the number of sellers in the market for good A decrease, it will have an impact on the equilibrium price and quantity of good A. Let us understand how:
Effect on demand:
When consumer incomes decrease, their purchasing power decreases, which means they will demand less of good A. Therefore, the demand curve for good A shifts to the left.
Effect on supply:
When the number of sellers in the market for good A decreases, the supply curve for good A shifts to the left. This means that the quantity of good A supplied at any given price will decrease.
Effect on equilibrium:
When both the demand and supply curves shift to the left, the equilibrium price and quantity of good A will be impacted.
- Equilibrium price: The decrease in demand and supply will put downward pressure on the price of good A, but the impact on price cannot be determined with certainty. Therefore, we cannot conclude that the price will increase or decrease.
- Equilibrium quantity: Since both demand and supply have decreased, the quantity of good A exchanged in the market will also decrease. Therefore, we can conclude with certainty that the equilibrium quantity will decrease.
Conclusion:
Based on the given information, we can conclude that the equilibrium quantity of good A will decrease, but we cannot determine the impact on the equilibrium price with certainty.
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Community Answer
Assume that consumers’ incomes and the number of sellers in the ...
As the demand and supply both are decreasing the equilibrium price will change but it is not certain.
But here the quantity of demand and supply will definitely reduced.
But here the quantity of demand and supply will definitely reduced.
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Assume that consumers’ incomes and the number of sellers in the market for good A both decrease. Based upon this information we can conclude, with certainty, that equilibrium :a)price will increase.b)price will decrease.c)quantity will increase.d)quantity will decrease.Correct answer is option 'D'. Can you explain this answer?
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Assume that consumers’ incomes and the number of sellers in the market for good A both decrease. Based upon this information we can conclude, with certainty, that equilibrium :a)price will increase.b)price will decrease.c)quantity will increase.d)quantity will decrease.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Assume that consumers’ incomes and the number of sellers in the market for good A both decrease. Based upon this information we can conclude, with certainty, that equilibrium :a)price will increase.b)price will decrease.c)quantity will increase.d)quantity will decrease.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Assume that consumers’ incomes and the number of sellers in the market for good A both decrease. Based upon this information we can conclude, with certainty, that equilibrium :a)price will increase.b)price will decrease.c)quantity will increase.d)quantity will decrease.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
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