Question

The current market price for good Y is above the equilibrium price, and then the price...

The current market price for good Y is above the equilibrium price, and then the price of a subsitute good, X, increases. The demand curve for good Y shifts as a result. What is the likely outcome of the demand shift?

A.

The shortage increases.
B.

The surplus decreases.
C.

The surplus increases.
D.

The shortage decreases
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer- Correct option is 'A'

The current market price for good Y is above the equilibrium price, and then the price of a subsitute good, X, increases. As a result, the demand curve for good Y shifts right, because substitute good is a good that can be used in place of another. If the price of one of the good rises, then the demand for substitute good is likely to increase. Now the outcome is a rightward shifts in demand or increase in demand will create a increase in shortage of supply of that good.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A shortage occurs when: demand for a good increases, causing an increase in the equilibrium price....
A shortage occurs when: demand for a good increases, causing an increase in the equilibrium price. demand for a good decreases, causing a decrease in the equilibrium price. the price of a good is held above the equilibrium price. the price of a good is held below the equilibrium price. An increase in the price of a good will cause: a rightward shift in the demand curve. a leftward shift in the demand curve. a movement up along a given...
15. If price increases above the equilibrium, Group of answer choices a surplus will develop. a...
15. If price increases above the equilibrium, Group of answer choices a surplus will develop. a shortage will develop. supply will shift. demand will decrease. 16. If a surplus develops in a market, Group of answer choices price will fall to equilibrium. price will increase to equilibrium supply will shift. The Yankees suck but how about dem Giants.
A price ceiling above the equilibrium price will result in the demand curve shifting left result...
A price ceiling above the equilibrium price will result in the demand curve shifting left result in a surplus result in anyone willing and able to buy the good to be able to buy it with no surplus result in a shortage It is argued that US Food Aid: is a cost-effective way to assist the world's poor is a side-product of providing large corporations with subsidies results from free market food surpluses in the US results from a US...
1. The market for toasters is a competitive market. Suppose that the quantity of toasters supplied...
1. The market for toasters is a competitive market. Suppose that the quantity of toasters supplied per year depends as follows on the price of a toaster: Price (dollars per toaster) Quantity supplied (millions of toasters) 32 4.0 34 5.0 36 5.5 38 6.0 40 6.5 a. On a piece of graph paper, plot the supply curve for toasters. b. How does the quantity supplied of toasters change when the price changes? 2. The market for toasters is a competitive...
Suppose the current price of a pound of steak is​ $6 per pound and the equilibrium...
Suppose the current price of a pound of steak is​ $6 per pound and the equilibrium price is​ $9 per pound. What takes​ place? A. There is a​ shortage, so the price rises and quantity demanded decreases. B. There is a​ surplus, so the price falls and quantity demanded increases. C. There is a​ shortage, so the price falls and quantity demanded decreases. D. There is a​ shortage, so the price falls and quantity demanded increases. E. There is a​...
Good A (an inferior good) and Good B (a normal good) are viewed by consumers to...
Good A (an inferior good) and Good B (a normal good) are viewed by consumers to be substitute products. Suppose that the price of Good B falls at the same time that consumer income increases. What is the net effect of these two events on equilibrium in the market for Good A? a. an increase in equilibrium quantity and an indeterminate effect on price b. a decrease in both the equilibrium price and quantity c. an indeterminate effect on quantity...
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve...
on a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. there is a __________ at that price and the current price must be __________ the equilibrium price. A-Shortage, above B-Shortage, below C-Surplus, above D-Surplus, below
Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money...
Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money multiplier is 6. Which of the following impacts are most likely to result? a. The money supply shifts inward, and the equilibrium interest rate rises in the money market. b. The money supply shifts outward, and the equilibrium interest rate falls in the money market. c. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the...
You are analyzing the market for Good X. You know the following: PEDx = -1.3 IEDx...
You are analyzing the market for Good X. You know the following: PEDx = -1.3 IEDx = 2.4 CPE(x,y) = 2 PESx = 1.4 a. If the price of Good Y increases, what do you expect to happen in the market for Good X? Describe any changes that may happen in a supply/demand graph and be sure to include how equilibrium price/quantity changes. b. Does knowing the price elasticity of supply help you determine how much the supply curve will...
Which of the following would result in a leftward shift in the supply curve for good...
Which of the following would result in a leftward shift in the supply curve for good X can be         attributed to        a. an increase in the price of an input used in the production of the good X.        b. an increase the price of a substitute good in production.        c. an increase in the price of good X.        d. an increase in the price of a complementary good in production.        e. more than one of these choices Which of the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT