question archive Consider the market for umbrellas
Consider the market for umbrellas
Subject:MarketingPrice:2.88 Bought3
Consider the market for umbrellas. If this winter is wetter than expected, and at the same time there is an increase in the number of sellers offering umbrellas for sale, then ceteris paribus we would expect:
a. the equilibrium price of umbrellas will decrease, but the effect on the equilibrium quantity is ambiguous.
b. the equilibrium quantity of umbrellas will increase, but the effect on the equilibrium price is ambiguous.
c. the equilibrium price of umbrellas will increase, but the effect on the equilibrium quantity is ambiguous.
d. the equilibrium quantity of umbrellas will decrease, but the effect on the equilibrium price is ambiguous.
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b. the equilibrium quantity of umbrellas will increase, but the effect on the equilibrium price is ambiguous
The winters are wetter in actual rather than expected, and then it could attract an increment in demand for umbrellas. Whereas it is radically given in the situation above, there are more sellers for umbrellas, that is, the supply for umbrellas also gets increased. Hence, demand and supply both somehow get increased, it would make an increment in the equilibrium quantities of umbrellas trade, but what would happen with the price is still in question, and dependent upon the extents of changes in both factors. Hence, the effect on the equilibrium price is somehow ambiguous.
