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29 May, 19:19

Suppose a fall in consumer income drives down the demand for lobster while a record harvest increases supply. How would these changes affect the equilibrium price and quantity of lobsters? Group of answer choices

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  1. 29 May, 20:59
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    A decrease in price and unambiguous change in quantity.

    Explanation:

    A decrease in consumer income causes the demand for lobster to decrease. This decrease in demand will cause the demand curve to move to the left.

    A record harvest will cause the supply of lobster to increase. This increase in supply will cause the supply curve to move to the right.

    These movements in the supply and demand curve will cause the price level to decline.

    The change in the equilibrium quantity depends upon the proportionate change in demand and supply. If both demand and supply change by the same proportion, the quantity will remain the same.

    If the decline in demand is more than the increase in supply, the quantity will fall.

    If the increase in supply is more than the decline in demand, the quantity will rise.
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