Refer to Scenario 3

question 208

Multiple Choice

Refer to Scenario 3.3 below to answer the question(s) that follow.
SCENARIO 3.3:
-Mustard and mayonnaise are substitutes.
-Mustard and relish are complements.
-Mustard is a normal good.
-During the summer, about 50% of all mustard was recalled by manufacturers and removed from store shelves.
-Refer to Scenario 3.3. If at the same time of the mustard recall, consumer income also decreased. Then, ceteris paribus, in the market for mustard this would have caused

• A) both the equilibrium price and quantity to decrease.
• B) the equilibrium price to increase and the equilibrium quantity to decrease.
• C) the equilibrium price to either increase, decrease, or remain the same and the equilibrium quantity to decrease.
• D) the equilibrium quantity could have increased, decreased, or remained the same and the equilibrium price to decrease.

---

Definitions:

Civilized Discourse

Respectful and reasoned discussion that aims to advance understanding without resorting to personal attacks or fallacies.

International Business Transactions

Business dealings that involve parties from more than one country, encompassing the exchange of goods, services, technology, and capital across national borders.

Foreign Distributor

An entity or individual that manages the distribution and sale of goods or services in a market outside of the supplier's home country.

Wholly Owned Subsidiary

A company whose entire stock is held by another company, making it fully controlled by the parent company.