In Each of the Following Situations, List What Will Happen

question 252

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. The 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:

Factory Overhead Rate

A calculation used to allocate manufacturing overhead costs to individual units of production, based on a certain base such as labor hours or machine hours.

Machine Hours

A measure of production time, tracking the total hours that machinery is in operation during the manufacturing process.

Fabrication Department

A division within a manufacturing company where raw materials are assembled or processed to create finished goods.

Procurement Activity

The process undertaken by businesses to acquire goods or services, including planning, selection, and purchasing, to meet its requirements.