If the supply of fish increases, there will be
- (A) an increase in the demand for chicken, a substitute good
- (B) an increase in the demand for fish
- (C) an increase in the price of fish tacos
- (D) a decrease in the price of fish
- (E) a decrease in the supply of potatoes, a complementary good
The correct answer and explanation is:
The correct answer is:
(D) a decrease in the price of fish
Explanation:
When the supply of fish increases, it means there is more fish available in the market. According to the law of supply and demand, when the supply of a good increases while demand remains the same, the equilibrium price of the good falls. This happens because sellers compete to sell their larger quantity of fish, leading to lower prices.
Why the Other Options Are Incorrect:
- (A) An increase in the demand for chicken, a substitute good → Incorrect. If fish becomes cheaper, people are more likely to buy more fish instead of chicken, which would decrease the demand for chicken rather than increase it.
- (B) An increase in the demand for fish → Incorrect. The increase in supply itself does not necessarily cause an increase in demand. Demand depends on consumer preferences, income, and the price of substitutes. Instead, the lower price may increase the quantity demanded but not the overall demand curve.
- (C) An increase in the price of fish tacos → Incorrect. Since fish is a key ingredient in fish tacos, a lower price of fish would likely lead to cheaper fish tacos, not an increase in their price.
- (E) A decrease in the supply of potatoes, a complementary good → Incorrect. While fish and potatoes (like in fish and chips) are often consumed together, an increase in the supply of fish does not directly affect the supply of potatoes. Supply is influenced by production factors, not the supply of another good.
Conclusion:
An increase in the supply of fish leads to a decrease in its price, making it more affordable for consumers. This aligns with basic economic principles of supply and demand.
Now, I’ll generate an image related to the concept of increased fish supply.
Here is the image illustrating the concept of an increased fish supply leading to lower prices in a bustling fish market. Let me know if you need any modifications!
