Question

   Suppose that the number of buyers in a market falls, while the wages that companies (in this market) pay to their employees increase by 20%. What would we expect to happen in the market?
   
A. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous.
B. The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
D. Both equilibrium price and equilibrium quantity would increase.

Answer 1

it can be mentioned that is the equilibrium wages increases then at the same budget the company prefers less employees as a result of which the supply decreases and the supply curve shift to the left as a result of which the price increases and quantity equilibrium decreases.

Also if buyers number fall, what happens is that the amount of demand decreases as a result of which the demand curve shift to the left and this results in decrease in price and decrease in quantity and in both cases quantity equilibrium decreases and therefore ultimately the quantity equilibrium is decreasing and in one case the price is increasing and in another place the price is decreasing and therefore price is ambiguous whether it increases or decreases.

Therefore (C) is the answer

Because price is ambiguousall the other three options which say price whether increase or decrease are wrong and that is the reason why

Therefore (A,B,D) are wrong