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Ture/False? Explain. Holding other things constant, in a given market if the consumer incomes increase and...

Ture/False? Explain. Holding other things constant, in a given market if the consumer incomes increase and the cost of producer inputs decrease, then the equilibrium price and the equilibrium quantity will both increase

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Answer #1

Answer : The answer is "False".

Remaining other things same as before if consumer income increase then the demand increase. This shift the demand curve to rightward. If production input cost decrease then the production level increase. This shift the supply curve to rightward. As a result, the equilibrium quantity will increase but the equilibrium price may increase, decrease or stay same based on changes in supply and demand. Therefore, the given statement is false.

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