Imagine that macaroni and cheese is an inferior good and its market iscurrently in equilibrium. What would happen to the equilibrium price and quantity of macaroni and cheese if the consumer incomes increase at the same time the new firms enter macaroni and cheese market?

1. P* will decrease but the effect on Q* is ambiguous
2. Q*will decrease but the effect on P*is ambiguous
3. Q*will increase but the effect on P*is ambiguous
4. P*will increase but the effect on Q*is ambiguous