Suppose there is a flood that damages the iceberg lettuce crop. At the same time, there is a 20% off sale for spinach, a substitute for iceberg lettuce.
What will happen to the equilibrium price and quantity of iceberg lettuce following these two events?

Question

Suppose there is a flood that damages the iceberg lettuce crop. At the same time, there is a 20% off sale for spinach, a substitute for iceberg lettuce.

What will happen to the equilibrium price and quantity of iceberg lettuce following these two events?

Accepted Answer

The effect on price is ambiguous, quantity decreases.

Answer

Price increases, quantity decreases.

Answer

Price decreases, quantity decreases.

Answer

Price decreases, the effect on quantity is ambiguous.

Answer

None of these.

Crowdly

Suppose there is a flood that damages the iceberg lettuce crop. At the same time...

Want instant access to all verified answers on moodle.telt.unsw.edu.au?