Question

Fill in the following table describing each events affect on market supply, demand, price and quantity...

Fill in the following table describing each events affect on market supply, demand, price and quantity in the market for potatoes, a normal good, indicating an increase, decrease or no effect on each variable: (Note: The first one is done for you.)

Question Supply Demand Price Quantity
1. Rainfall increases in the market for potatoes Increase No Effect Decrease Increase
2. Number of farmers decreases
3. Consumer’s income increases
4. Price of rice, which is not an alternative good for potatoes, decreases
5. Farm workers wages decreases
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Answer #1

Solution:-

1) A decrease in the number of farmers will "Decrease" the Supply, Demand will have "no effect", Price will"increase" and the quantity will "Decrease".

2) An increase in the consumer income will have "no effect" on the supply, demand will "increase", Price will "increase" and the quantity will "increase".

3) Rice is a complementary product with potato (people eat these to things together) this will have "no effect" on the supply of the potatoes, demand for potatoes will "increase" which will "increase" the price of the potatoes and also the quantity will "increase"

4) Farm wages decrease will make the supply of potatoes cheaper this will "increase" the supply have "no effect" on the demand "decrease" the price and "increase" the quantity.

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