Figure 2.1 The Market for Calculators

-Refer to Figure 2.1. Initially, the market is in equilibrium at a price of $25 and quantity of 15 calculators. If consumer incomes decrease and calculators are normal goods, which of the following would best represent the new equilibrium price and quantity?
A) price = $40, quantity = 21 calculators
B) price = $65, quantity = 15 calculators
C) price = $15, quantity = 11 calculators
D) price = $50, quantity = 10 calculators

Question

Figure 2.1 The Market for Calculators
 
-Refer to Figure 2.1. Initially, the market is in equilibrium at a price of $25 and quantity of 15 calculators. If consumer incomes decrease and calculators are normal goods, which of the following would best represent the new equilibrium price and quantity?
A) price = $40, quantity = 21 calculators 
B) price = $65, quantity = 15 calculators 
C) price = $15, quantity = 11 calculators 
D) price = $50, quantity = 10 calculators

Quizplus · Accepted Answer

When consumer incomes decrease and calculators are normal goods, demand for calculators would decrease because consumers would have less income to spend on these goods. This would lead to a lower equilibrium price and quantity, as represented by option C, where the price decreases to $15 and the quantity decreases to 11 calculators.

Figure 2.1 the Market for Calculators