Consider the market for pizza in a large city. Identify what happens to the equilibrium price, quantity, and total consumer expenditures after each of the following events listed below, assuming that pizza is a normal good and the price elasticity of demand for pizza is 1.20. Treat each event as independent of the others.
Event 1: The price of labor goes up.
Event 2: The number of pizza restaurants increases.
Event 3: Consumer income rises.
For Event 1, the equilibrium price is expected to _______, the equilibrium quantity is expected to ______, and total consumer expenditures on pizza are expected to ________.
A. Decrease; decrease; decrease
B. Increase; decrease; increase
C. Increase; decrease; decrease
D. Decrease; increase; increase
Same question but for event 2 and 3
Event 1: The price of labor goes up.
Event 2: The number of pizza restaurants increases.
Event 3: Consumer income rises.
For Event 1, the equilibrium price is expected to _______, the equilibrium quantity is expected to ______, and total consumer expenditures on pizza are expected to ________.
A. Decrease; decrease; decrease
B. Increase; decrease; increase
C. Increase; decrease; decrease
D. Decrease; increase; increase
Same question but for event 2 and 3