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In Each of the Following Situations, List What Will Happen

question 56

Essay

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good.
a.The population increases and productivity increases.
b.Income increases and the price of inputs decrease.
c.The number of firms in the market decreases and income increases.
d.Consumer preference increases and the price of a complement decreases.
e.The price of a substitute in consumption decreases and the price of a substitute in production decreases.


Definitions:

Underlying Security

Refers to the asset (such as a stock, bond, commodity, or currency) upon which a derivative's value is based.

Market Interest Rates

The prevailing rates at which borrowers and lenders engage in lending transactions in the open market.

American Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a specified price within a given time frame.

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