Assume that you are able to determine that the equilibrium price for a good will definitely decrease, and the equilibrium quantity will definitely increase. Which of the following MUST have occurred for you to be able to make these conclusions? a. Demand decreased and supply decreased b. Demand increased. c. Demand decreased and supply increased. d. Demand increased and supply decreased. e. Supply increased.
Assume that you are able to determine that the
a.
b. Demand increased.
c. Demand decreased and supply increased.
d. Demand increased and supply decreased.
e. Supply increased.
When demand and supply both change in the same direction (for example, they both decrease), the change in the equilibrium quantity can be predicted with certainty.
a. True
b. False
Consider the market for wood flooring. The economic downturn has caused many firms selling wood flooring to go out of business. At the same time, consumers are expressing a preference for wood flooring over alternatives like carpet and tile. Based on this information, what would you expect to happen to the price of wood flooring?
a. The price will definitely stay the same.
b. More information is needed to answer this question.
c. The price will definitely decrease.
d. The price will definitely increase.
The result of a cross price elasticity calculation between goods A and B is –2.4. From this you can conclude that A and B are substitutes.
a. True
b. False
The income elasticity of demand for laptops is 0.8. From this information you can conclude that laptops are normal goods.
a. True
b. False
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