Question

3. Suppose you are the vice president of operations for a gourmet grocery chain that sells prepared foods. se that your economist tells you that your sushi is a normal good; and she predicts that consumer incomes will increase by 32% d sushi will . uring the upcoming fiscal year. Cerers paribus it follows that the price of tity you sell will and the quan A. increase; increase B. increase; decrease C. decrease; decrease D. decrease; increase 4. In the space below, graph the impact of the increase in consumer incomes on the market for sushi. Be sure to show clearly the impact of the change on the equilibrium price and quantity exchanged.

Answer 1

3.

Since Sushi is a normal good, so with the increase in the income of the consumers, the purchasing power of the consumers increase and demand for normal good increases. Therefore the demand for the Sushi will increase and therefore the demand curve for sushi will shifts rightward from D to D1. Therefore the equilibrium price will decrease and equilibrium quantity will increase.

Hence it can be said that the price of sushi will decrease and the quantity sold will increase.

Hence option D is the correct answer.

4.

As it can be seen in the diagram that equilibrium price decreases from P to P1 and equilibrium quantity will increase from Q to Q1.

All this have been shown in the below diagram.

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