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Explain the Effect of the Following Changes on Equilibrium Price

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Essay

Explain the effect of the following changes on equilibrium price and quantity of a commodity:
(a) increase in average incomes.
(b) increase in population.


Definitions:

Cross-Price Elasticity of Demand

A measure indicating how the quantity demanded of one good or service changes in response to a price change of another good or service.

Cross-Price Elasticity of Demand

The sensitivity measure of one good's demanded quantity to the price changes of a separate good.

Rice and Beans

A staple food dish in many cultures around the world, consisting of rice and beans as the main ingredients.

Complements

Goods or services that are typically consumed together, where the increase in the price of one leads to a decrease in demand for the other.

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