Chewing gum is considered an inferior good. What would happen to the equilibrium price and quantity of chewing gum if income decreased and more firms started producing chewing gum?

Here's how to analyze the changes in equilibrium price and quantity: Step 1: Analyze the impact of decreased income on an inferior good. An inferior good is a good whose demand increases when consumer income decreases. Since income decreased, the demand for chewing gum will increase, shifting the demand curve to the right. This, by itself, would lead to a higher equilibrium price and a higher equilibrium quantity. Step 2: Analyze the impact of more firms producing chewing gum. More firms producing chewing gum means an increase in the supply of chewing gum. This shifts the supply curve to the right. This, by itself, would lead to a lower equilibrium price and a higher equilibrium quantity. Step 3: Combine the effects on equilibrium price and quantity. • Equilibrium Quantity: Both the increase in demand and the increase in supply lead to an increase in equilibrium quantity. Therefore, the equilibrium quantity will definitely go up. • Equilibrium Price: The increase in demand pushes the price up, while the increase in supply pushes the price down. Since these effects work in opposite directions, the net effect on the equilibrium price is indeterminate without knowing the relative magnitudes of the shifts. Based on this analysis, the correct option is: Equilibrium price will be indeterminate and the equilibrium quantity will go up. The final answer is Equilibrium price will be indeterminate and the equilibrium quantity will go up. Send me the next one 📸