Question 29 Not yet answered Points out of 100 P Flag questi

Question 29 Not yet answered Points out of 1.00 P Flag question Assume the demand curve for a good is downward sloping, and the supply curve for the good is upward sloping. If the price of a substitute for the good increases and income decreases, then Select one: a. the equilibrium price of the good will increase, and the equilibrium quantity of the good will decrease. b. the equilibrium price of the good will decrease, and the equilibrium quantity of the good will decrease c. We cannot determine the impact on equilibrium price and quantity. d. the equilibrium price of the good will decrease, and the equilibrium quantity n… good will increase. e.the equilibrium price of the good will increase, and the equilibrium quantity of the good will increase. --,

Solution

Option c is correct

We cannot determine the impact on equilibrium price and quantity.

(Decrease in income would reduce the demand for a normal good whereas increase in price of a substitute would increase the demand for the concerned good)