Question

The market for blue jeans is in equilibrium. Blue jeans are a normal good for consumers. If a recession reduces consumers' incomes at the same time that the price of denim (an input in the making of blue jeans) increases, we can say with certainty that as a result:

Answer 1

If a recession reduces consumers' incomes at the same time that the price of denim increases, we can say with certainty that as a result the equilibrium quantity of blue jeans will decrease.

What is Equilibrium?

In a market-based economy, economic factors such as supply and demand are regulated, resulting in economic equilibrium. In the absence of external influences, economic variables in equilibrium are in their original state.

When a country's economy has negative gross domestic product (GDP), rising unemployment,  which leads to  low income  and decreasing sales, manufacturing indicators for a period of time, it is said to be in recession.

If a recession reduces consumers incomes at the same time that the price of denim increases which means price is high so demand  will low which means quantity of blue jeans will decrease.

Learn more about recession, here:

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