Consider the market for loquats. Here is some information about loquats that you
ID: 1092138 • Letter: C
Question
Consider the market for loquats. Here is some information about loquats that you might find useful:
The elasticity of demand for loquats is -0.5
The income elasticity of demand for loquats is +1.0.
The cross price elasticity of demand between loquats and kumquats is +0.8.
The cross-price elasticity of demand between loquats and widgets is -1.2.
Loquats are produced using land, labor, and fertilizer as inputs.
The incomes of loquat consumers fall. The impact on equilibrium price (P) and quantity (Q) of loquats is:
P up, Q down
P down, Q up
P and Q both down
P and Q both up
None of the above
A.P up, Q down
B.P down, Q up
C.P and Q both down
D.P and Q both up
E.None of the above
Explanation / Answer
P and Q both down
C.P and Q both down