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What would happen to the equilibrium price and quantity exchanged in the following cases?

a. an increase in income and a decreasing price of a complement, for a normal good

b. a technological advance and lower price input prices

c. an increase in the price of a substitute and an increase in income, for inferior good

d. producer's expectations that prices will soon fall, and increasingly costly government regulations

Ā 

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Anne Gillian Duero
Anne Gillian DueroLv10
1 Nov 2020
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Related questions

1. Select the scenarios that result in lower prices if they were to occur in isolation?

a. Higher technology, fall in the price of a substitute, decrease in the price of a complement

b. Higher productivity, lower taxes on corporations, lower expected future prices

c. Higher income for inferior goods, higher subsidies for firms, increase in tastes and preferences

d. Lower costs of production, fall in the price of substitute, reduction in consumer subsidies

2. If the price of substitute increased the result would be __________ prices, and we would say__________

a. an increase in prices, quantity demanded increased

b. an increase in prices, demand increased

c. a decrease in prices, demand decreased

d. a decrease in prices, supply increased

3. Consumers can make costly mistakes when not enough information is available. Which of the following represents a market solution to obtaining costly information?

a. Franchises

b. Advertising

c. Third party verification

d. All of the above

Which of the following would cause an increase in the equilibrium price of jelly and decrease in the equilibrium quantity sold?

a. an increase in the price of peanut butter, a complement to jelly

b. an increase in the price of Marshmallow Fluff, a substitute for jelly

c. an increase in the price of grapes, an input into jelly

d. an increase in consumers' income, as long as jelly is a normal good

In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good. Clearly explain your answers.

c. The number of firms in the market decreases and income increases.

d. Consumer preference increases and the price of a complement decreases.

e. The price of a substitute in consumption decreases and the price of a substitute in production decreases.

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