Answer to Question #329440 in Economics for Portia

Question

The market for good A (an inferior good) is in equilibrium. Then average household income increases and, simultaneously, new regulations from the Department of Health on the producers of good A add to production costs. As a result, the equilibrium price of good A will

Answer 1

An inferior good is an economic term that describes a good whose demand drops when people's incomes rise.

The average household income growth is a precondition of a relevant demand decrease.

An increase of a good A production costs potentially lead to a drop in its demand.

Therefore, all the indicated market changes lead to a good A demand decrease.