Asked by McGwire Midkiff on May 02, 2024
Verified
In the local market for coffee,a normal good,the price will _____ and the quantity will _____ if new coffee shops open and consumers' incomes decrease because of a recession.
A) increase;be indeterminate
B) decrease;be indeterminate
C) be indeterminate;increase
D) be indeterminate;decrease
Coffee Shops
Retail establishments that primarily sell coffee, along with other beverages and light snacks, often serving as social hubs in communities.
Normal Good
A type of good for which demand increases when consumer income increases, and decreases when consumer income decreases, assuming all other factors remain constant.
Recession
A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
- Ascertain the consequences of economic changes, for instance, income variations and shifts in production expenses, on market equilibrium.
- Project the impact on market scenarios when supply and demand shift concurrently.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
B
Explanation :
When new coffee shops open, it increases the supply of coffee, which will lead to a decrease in price. Also, when consumers' incomes decrease, they will have less disposable income to spend on coffee, leading to a decrease in demand. The decrease in both demand and supply will lead to a decrease in the quantity of coffee sold.
Learning Objectives
- Ascertain the consequences of economic changes, for instance, income variations and shifts in production expenses, on market equilibrium.
- Project the impact on market scenarios when supply and demand shift concurrently.