Answer to Question #121926 in Microeconomics for hamza

Question

b. The supply of chicken meat in Pakistan increases, causing meat prices to fall. Lower prices always mean that Pakistani households spend more on meat.

Answer 1

• Increase in supply can be caused by decrease in demand causing prices to fall.
• Increase in supply can results to decrease in price and increase in quantity
• Lower prices don't always translate to higher spending on a commodity,thus Pakistan spending on meat could decrease if the change in quantity demanded is less than change in price.
• This statement;Lower prices always mean that Pakistani households spend more on meat IS NOT TRUE.