Which of the Following Would Cause Both the Equilibrium Price

question 170

Multiple Choice

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease?

• A)an increase in consumer income
• B)a freeze that sharply reduces potato output
• C)a decrease in consumer income
• D)a technological advancement that results in a bumper crop of potatoes

---

Definitions:

Physical Capital

Refers to tangible assets used in the production of goods and services, such as machinery, buildings, and tools.

Productivity

The measure of the efficiency of production, often defined as the ratio of output to inputs in the production process.

Constant Returns To Scale

A situation in production where an increase in the input of resources leads to a proportionate increase in output, resulting in no change in average costs.

Production Function

The relationship between the quantity of inputs used to make a good and the quantity of output of that good.