Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?
A)An increase in consumer income
B)A decrease in consumer income
C)Greater government restrictions on agricultural chemicals
D)Fewer government restrictions on agricultural chemicals

Question

Quizplus · Accepted Answer

CB) A decrease in consumer income would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase because as an inferior good, demand for number two grade potatoes rises when income falls, pushing up both price and quantity.C) Greater government restrictions on agricultural chemicals could increase the cost of production for all grades of potatoes, leading to a decrease in supply. This decrease in supply would cause the equilibrium price to rise and, if the demand for number two grade potatoes increases or remains unchanged due to their status as an inferior good, the equilibrium quantity would also increase.

Which of the Following Events Would Cause Both the Equilibrium