Refer to Scenario 3

question 255

Multiple Choice

Refer to Scenario 3.2 below to answer the question(s) that follow.
SCENARIO 3.2: Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding.
-Refer to Scenario 3.2. If at the same time that part of the lettuce crop was destroyed, consumer income also decreased, then, ceteris paribus, in the market for lettuce 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 decrease. The equilibrium quantity could have increased, decreased, or remained the same.
• D) the equilibrium price to either increase, decrease, or remain the same and the equilibrium quantity to decrease.

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Definitions:

Recreational Activities

Activities undertaken for pleasure, leisure, and relaxation during free time.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price within a specific time period.

Equilibrium Prices

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to a stable market condition where there is no tendency for change.