Question

Assume that the market for base-balls is in equilibrium. There is a sudden decrease in income throughout the economy. If all else is held constant, we would expect that if base-balls are a(n) ________ good, then the demand curve will shift to the ________, causing the equilibrium price and quantity to ________.a) normal; left; rise b) normal; right; rise c) inferior; right; fall d) normal; left; fall e) inferior: left; fall

Answer 1

Answer:

d) normal; left; fall

Explanation:

A normal good is a good whose demand increases when income increases and whose demand falls when income falls.

An inferior good is a good whose demand increases when income falls.

If baseball is a normal good and income falls, quantity demanded falls. The demand curve would shift to the left. This leads to a fall in price.

If baseball were an inferior good, if income falls, quantity demanded rises and the demand curve shifts to the right and the equilibrium price and quantity rises.

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