Question

According to a supply and demand model for apples, if the average household income decreases at the same time 10 apple orchards go out of business, one would expect the equilibrium Group of answer choices price of apples to be indeterminate and the equilibrium quantity of apples in the market to increase. quantity of apples in the market to be indeterminate and the equilibrium price of apples to increase. price of apples to increase and the equilibrium quantity of apples in the market to decrease. quantity of apples in the market to decrease and the equilibrium price of apples to stay the same. quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.

Answer 1

quantity of apples in the market to decrease and the equilibrium price of apples to be indeterminate.

Step-by-step explanation:

The decrease in income would reduce the demand for apples because there would be less disposable income available to buy apples. The decrease in demand would lead to a fall in price and quantity

If 10 orchards go out of business. The supply of apples would reduce. This would reduce quantity and increase price.

Taking these two occurrence together, equilibrium quantity would fall and there would be an indeterminate change in equilibrium price

Check the attached image for a graph showing these changes