From 1970 to 2010, the real price of eggs decreased. Which of the following would cause an unambiguous decrease in the real price of eggs?
A) A shift to the right in the supply curve for eggs and a shift to the right in the demand curve for eggs.
B) A shift to the right in the supply curve for eggs and a shift to the left in the demand curve for eggs.
C) A shift to the left in the supply curve for eggs and a shift to the right in the demand curve for eggs.
D) A shift to the left in the supply curve for eggs and a shift to the left in the demand curve for eggs.

Question

Quizplus · Accepted Answer

A shift to the right in the supply curve for eggs would decrease the equilibrium price of eggs. A shift to the left in the demand curve for eggs would also decrease the equilibrium price of eggs. Together, these two shifts would cause an unambiguous decrease in the real price of eggs. Choice A would cause a decrease in price, but it is not unambiguous as it depends on the magnitude of the shifts. Choices C and D would both cause an increase in price, so they can be eliminated.

From 1970 to 2010, the Real Price of Eggs Decreased