Which of the Following Would Cause Both the Equilibrium Price

question 24

Multiple Choice

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

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

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Definitions:

Government's Expenditures

The total amount spent by a government on goods, services, and public projects within a specific period.

Market for Loanable Funds

A theoretical financial market where borrowers and lenders interact, with the loan interest rate being determined by supply and demand for funds.

Capital Investment

The purchase of goods or services by a firm to add to its fixed assets to increase its capacity or efficiency in producing goods or services.

Consumption

The use of goods and services by households, one of the major components of an economy’s gross domestic product, indicating economic health and consumer confidence.