Question

When a change in the supply and demand occur within a market, the effect on the new equilibrium market price or quantity can be determined. However, without information on the relative size of these shifts, both price and quantity cannot be determined. Match the supply and demand changes to the outcome that is known about the new equilibrium in the market for pizza, where pizza is a normal good and cheese and dough are inputs. consumer income rises; pizza dough decreases in price consumer income falls; pizza dough decreases in price consumer income falls; cheese increases in price consumer income rises; cheese increases in price price decreases; output uncertain______price increases; output uncertain_____output decreases; price uncertain______output increases; price uncertain_____.

Answer 1

Answer:

consumer income rises; pizza dough decreases in price

⇒ output increases; price uncertain

• higher consumer income results in higher prices
• but decrease in the price of inputs results in lower prices
• both result in higher output

consumer income falls; pizza dough decreases in price

⇒ price decreases; output uncertain

• both result in lower prices
• falling consumer income result in lower output
• decrease in the price of inputs results in higher output

consumer income falls; cheese increases in price

⇒ output decreases; price uncertain

• both lower output
• falling consumer income decreases price
• increase in price of inputs increases price

consumer income rises; cheese increases in price

⇒ price increases; output uncertain

• both increase price
• rising consumer income increase output
• increase in price of inputs decreases output