Answer:
d) The change to the equilibrium price of French chocolate souffle is ambiguous and the equilibrium quantity of French chocolate souffle falls
Explanation:
Inferior goods are those goods whose demand falls with the rise in the income of the consumer.
As per the given case, French chocolate souffle is an inferior good. When income of the consumer rises, his demand for French chocolate souffle will fall.
Similarly, when producers of such an inferior good decrease, the supply of French chocolate souffle shall fall.
With respect to the original equilibrium level, the demand curve shall experience a leftward shift i.e decrease whereas the supply curve too experiences a leftward shift i.e supply falls.
At the new equilibrium level, definitely the equilibrium quantity shall fall, but the change in equilibrium price cannot be ascertained as per the given information.
