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In a competitive market for an inferior good we have a fall in the price of an intermediate good used in production and a fall in expected future household income. Ceteris paribus, we can predict that:

a) the price of the good will rise, but we cannot make a prediction regarding quantity sold withoutfurther information.
b) the quantity sold of the good will rise, but we cannot make a prediction regarding the price of the good without further information.
c) the quantity sold of the good will fall, but we cannot make a prediction regarding the price of the good without further information.
d) The price of the good will fall, but we cannot make a prediction regarding quantity sold without further information.
e) None of the above are correct.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M939366

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