Question

What happens to equilibrium price as well as equilibrium quantity for a normal good if consumer income goes down (ceteris peribus)?

a)Eq. price will increase, and eq. quantity will increase
b) Eq. price will increase, and eq. quantity will decrease
c)Eq. price will decrease, and eq. quantity will increase
d) Eq. price will decrease, and eq. quantity will decrease

What happens to equilibrium price as well as equilibrium quantity for TV's if a new invention reduces the cost of producing TV's (ceteris peribus)

a)Eq. price will increase, and eq. quantity will increase
  b) Eq. price will increase, and eq. quantity will decrease
     c)Eq. price will decrease, and eq. quantity will increase
        d)  Eq. price will decrease, and eq. quantity will decrease

Answer 1

Q1) Initially equilibrium be at E where quantity demand is Q and quantity price is P

Due to decrease in income, demand curve will decrease thus shift to the left . This is because factors other than demand causes shifts in demand curve

New equilibrium be P1 and equilibrium quantity be Q1

So both will decrease

Option D

Q2 Due to innovation, costs decrease so producers will induce to produce more thus raising supply and shifting the S to S1

Where equilibrium price decreases and

Equilibrium quantity increases.

Option C is correct