If two events occur—an increase in minimum wage and a decrease in the price of a food item that complements rice—what might happen to the price and quantity of rice?

When analyzing the impact of two simultaneous events—increases in minimum wage and decreases in the price of a complementary good to rice—it is essential to consider how each event influences the market for rice.

An increase in the minimum wage generally leads to higher disposable income for consumers. With more income, consumers can afford to buy more goods, including rice. This increased demand tends to push the market price of rice upward, assuming supply remains constant.

Conversely, a decrease in the price of a complementary good, such as a food item that is typically consumed with rice, makes it cheaper for consumers to purchase this item along with rice. This scenario would also likely increase the demand for rice, as consumers are incentivized to buy both items together, further contributing to an upward pressure on the price of rice.

However, the simultaneous effects of these two events can complicate the outcome regarding price and quantity. The increase in demand for rice from the minimum wage increase and from the price drop of the complementary good suggests that quantity sold is likely to rise. Still, the overall impact on the price of rice is more complex because it involves shifts from both the demand side (increasing) and potential changes from the supply side, which are less predictable without further context on the responsiveness