Pens are normal goods.What will happen to the equilibrium price of pens if the price of pencils rises,consumers experience an increase in income,writing in ink becomes fashionable,people expect the price of pens to fall in the near future,the population increases,fewer firms manufacture pens,and the wages of pen-makers decrease?

Question

Quizplus · Accepted Answer

The price change will be ambiguous as the given factors are mixed and some may have a positive impact on the demand for pens and some may have a negative impact on the supply of pens. For example, an increase in income and writing in ink becoming fashionable may increase the demand for pens, while fewer firms manufacturing pens and a decrease in the wages of pen-makers may decrease the supply of pens. Therefore, the equilibrium price of pens cannot be determined with certainty.

Pens Are Normal Goods