Which of the Following Would Cause Both the Equilibrium Price

question 146

Multiple Choice

Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase?

• A)an increase in consumer income
• B)a drought that sharply reduces barley output
• C)a decrease in consumer income
• D)unusually good weather that results in a bumper crop of barley

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Definitions:

Total Fixed Costs

The sum of all costs required to produce any output in the short term that does not change with the level of production, such as rent, salaries, and insurance.

Total Fixed Costs

Fixed costs are expenses that do not change with the level of output produced, such as rent or salaries, summed up as the total fixed costs.

Average Fixed Costs

The costs of production that remain constant regardless of output level, when divided by the amount of output generated.

Average Fixed Costs

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, which decreases as production increases.