The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.

Question

Quizplus · Accepted Answer

A recession and a decrease in consumers' incomes typically leads to a decrease in demand for goods, including computer chips. As a result, producers will likely reduce the price of computer chips in order to encourage consumers to purchase them, but the decrease in demand will also result in a decrease in quantity produced.

The Economy Is Undergoing a Recession That Has Reduced Consumers