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Illustrate the impact on equilibrium price and equilibrium quantity for each scenario listed below, ceteris paribus...

Illustrate the impact on equilibrium price and equilibrium quantity for each scenario listed below, ceteris paribus (also, treat each part separately). In each blank, write “increase”, “decrease”, or “indeterminate”.

a) Suppose Frosty Cola is a normal good. Assume that consumer income decreases at the same time the number of producers of Frosty Cola decreases.

            Equilibrium Price _______________      Equilibrium Quantity _______________

b) Suppose Zazzy Cola is an inferior good. Assume that consumer income decreases at the same time the number of producers of Zazzy Cola decreases.   

            Equilibrium Price _______________      Equilibrium Quantity _______________

c) Suppose buyers expect the price of Frosty Cola to decrease next week.   

            Equilibrium Price _______________      Equilibrium Quantity _______________

d) Suppose sellers expect the price of Frosty Cola to decrease next week.

            Equilibrium Price _______________      Equilibrium Quantity _______________

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Rahul Sunny answered 2 years ago
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