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Suppose a Fall in Consumer Income Drives Down the Demand

Question 13

Multiple Choice

Suppose a fall in consumer income drives down the demand for lobster while a record harvest increases supply. How would these changes affect the equilibrium price and quantity of lobsters?


A) Both equilibrium price and equilibrium quantity would decrease.
B) The equilibrium price would fall, but the effect on the equilibrium quantity cannot be predicted.
C) The equilibrium price would fall and the equilibrium quantity would increase.
D) The equilibrium quantity would increase, but the effect on price cannot be predicted.

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