Question

QUESTION 12 (4 Marks) 12. Suppose you are an economic analyst studying consumer behaviour in a small town. You have gathered data on the demand for various goods in the local market. One of the goods you have been examining is a specific brand of instant noodles, known for its affordability and popularity among budget-conscious consumers. You have plotted the demand and supply curves for these instant noodles as shown in figure 12.1. Figure 12.1 S2 S1 Price p P3 P1 D2 D1 q2 q1 Quantity q D3 Assuming that the instant noodles are a representative of an inferior good, which of the following could explain a movement from point $p_1q_2$ to point $p_1q_1$ in the figure above? a) an increase in the price of a complement b) an increase in buyers' income c) a decrease in the buyers' income d) an increase in the price of the good

          QUESTION 12
(4 Marks)
12. Suppose you are an economic analyst studying consumer behaviour in a small town. You have gathered
data on the demand for various goods in the local market. One of the goods you have been examining is a
specific brand of instant noodles, known for its affordability and popularity among budget-conscious
consumers. You have plotted the demand and supply curves for these instant noodles as shown in figure
12.1.
Figure 12.1
S2
S1
Price p
P3
P1
D2
D1
q2 q1
Quantity q
D3
Assuming that the instant noodles are a representative of an inferior good, which of the following could
explain a movement from point $p_1q_2$ to point $p_1q_1$ in the figure above?
a)
an increase in the price of a complement
b)
an increase in buyers' income
c)
a decrease in the buyers' income
d)
an increase in the price of the good

Added by Francisco A.

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