Refer to Scenario 3.3 below to answer the question(s) that follow.
SCENARIO 3.3:
-Mustard and mayonnaise are substitutes.
-Mustard and relish are complements.
-Mustard is a normal good.
-During the summer, about 50% of all mustard was recalled by manufacturers and removed from store shelves.
-Refer to Scenario 3.3. If at the same time of the mustard recall, consumer income also decreased. Then, ceteris paribus, in the market for mustard this would have caused

Question

Quizplus · Accepted Answer

The recall of mustard reduces the supply, potentially increasing price and decreasing quantity. However, a decrease in consumer income, given mustard is a normal good, would decrease demand, potentially lowering price and quantity. These effects make the price's direction uncertain but suggest a decrease in quantity.