Suppose That Both the Equilibrium Price and the Equilibrium Quantity

question 125

Multiple Choice

Suppose that both the equilibrium price and the equilibrium quantity of ketchup fall.The most consistent explanation for these observations is

• A) a decrease in the demand for ketchup with no change in supply.
• B) an increase in the demand for ketchup with no change in supply.
• C) an increase in the demand for ketchup and a decrease in the supply of ketchup.
• D) an increase in the supply of ketchup with no change in demand.
• E) a decrease in the supply of ketchup with no change in demand.

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Definitions:

Infant Industry Argument

A protective economic theory suggesting that emerging domestic industries should be shielded from foreign competition until they become competitive.

Tariff

A tax imposed by a government on imported goods to protect domestic industries or raise revenue.

Domestic Market

The market within a country where goods and services are traded domestically.

Trade Restrictions

Government-imposed limitations on the free exchange of goods and services between countries, including quotas, tariffs, and embargoes.