What happens in the market for rice if the increase in minimum wage has a greater impact than the decrease in price of spam?

In this scenario, the market dynamics of rice are influenced by both the increase in minimum wage and a decrease in the price of spam. When the minimum wage rises, workers typically have more income, which can increase their purchasing power and demand for goods, including rice. If the increase in demand is more significant than the effect of the decrease in spam price, then the overall demand for rice would rise.

The decrease in the price of spam, a substitute good, might lead some consumers to shift their preferences toward buying more spam instead of rice. However, if the increase in demand for rice driven by higher wages is greater than the substitution effect of lower spam prices, it suggests that consumers are still willing to buy more rice despite the price change in spam.

Under these circumstances, the increased demand for rice will likely push the price of rice up while also resulting in an increase in the quantity of rice sold in the market. The net result is a scenario where the price rises due to stronger demand but the overall quantity in the market would decrease because of potential supply constraints or other market pressures.

Therefore, the conclusion that price increases and quantity decreases is grounded in the notion that higher demand can lead to higher prices, while the interplay between supply limitations and demand shifts can