What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise
What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise. Assume that lattés are a normal good?
Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Homework Answers
Answer : Option a) Both the equilibrium price and quantity would increase
Explanation : When the income of consumers rise, the demand curve for normal goods shift outward. Thus showing a higher demand of the good at any given price. So here when the demand curve shifts outward but the supply curve remains the same, the new equilibrium results both in a higher price and a higher quantity level.
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What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise
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