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econ ch. 4 HW
Terms in this set (10)
Which of the following might cause the demand curve for an inferior good to shift to the left?
an increase in the price of a complement
Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires
a. decreases, and the supply of tires increases.
b. is unaffected, and the supply of tires decreases.
c. is unaffected, and the supply of tires increases
none of the above is necessarily correct
Equilibrium quantity must decrease when demand
dqecreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease
Equilibrium price must decrease when demand
decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously
Which of the following might cause the supply curve for an inferior good to shift to the right?
a. an increase in input prices
b. a decrease in consumer income
c. an improvement in production technology that makes production of the good more profitable
d. a decrease in the number of sellers in the market
an improvement in production technology that makes production of the good more profitable
Which of the following events must result in a lower price in the market for Snickers
a. Demand for Snickers increases, and supply of Snickers decreases.
b. Demand for Snickers and supply of Snickers both decrease.
c. Demand for Snickers decreases, and supply of Snickers increases.
d. Demand for Snickers and supply of Snickers both increase
demand for snickers decreases and supply of snickers increases
If there is currently a shortage of the good than
supply and demand predict price will rise to eliminate shortage
Saddle shoes are not popular right now, so very few are being produced. If saddle shoes become popular, then how will this affect the market for saddle shoes?
The demand curve for saddle shoes will shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.
Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?
Quantity will rise, and the effect on price is ambiguous
New cars are normal goods. What will happen to the equilibrium price of new cars if the price of gasoline rises, the price of steel falls, public transportation becomes cheaper and more comfortable, auto-workers accept lower wages, and automobile insurance becomes more expensive?
Price will fall.
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