Question:
Suppose the market for good X is currently in equilibrium. Which of the following events would not cause decrease in both equilibrium price and equilibrium quantity of good X?
(1) An increase in the price of good Y which is a complement for good X.
(2) A decrease in the price of good Y which is a substitute for good X.
(3) A decrease in consumer income and good X is a normal good.
(4) An increase in consumer income and good X is an inferior good.
(5) An increase in the number of buyers in the market for good X.
Correct Answer:
(5)
Answer Explanation:
A decrease in both equilibrium price and quantity happens when the Demand curve shifts to the left. Options 1 through 4 all describe scenarios that reduce demand. Option 5 (more buyers) would shift demand to the right, causing both price and quantity to increase.
Topic: Market Equilibrium Year: 2021
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