Question

Assume that carrots are a normal good. If consumer income declines at the same time   ...

Assume that carrots are a normal good. If consumer income declines at the same time    that    production costs for carrots decrease, then the equilibrium price will _____ and the    equilibrium quantity will _____.

   a) increase; be indeterminate
   b) be indeterminate; decrease
   c) increase; increase
   d) decrease; decrease
   e) decrease; be indeterminate

5. Assume the same situation as in Question 4. This time, however, economists anticipate that    the demand effect will be smaller than the supply effect. Accordingly, the equilibrium       price of carrots will _____ and the equilibrium quantity will _____.

   a) decrease; increase
   b) be indeterminate; decrease
   c) increase; decrease
   d) decrease; decrease
   e) decrease; be indeterminate


Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

4. e) decrease; be indeterminate

Explanation: Here, the demand curve shifts left and the supply curve shifts right. So, the price would definitely fall. However, the change in quantity is indeterminate because it depends on whether demand effect is smaller or the supply effect.

5.    a) decrease; increase

Explanation: Here, the demand curve shifts left and the supply curve shifts right. So, the price would definitely fall. Also, since the demand effect will be smaller than the supply effect, the fall in quantity due to demand effect is smaller than the rise in quantity due to supply effect. So, quantity will increase.

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
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...
Table: An Increase in Supply A Decrease in Supply An Increase in Demand A B A...
Table: An Increase in Supply A Decrease in Supply An Increase in Demand A B A Decrease in Demand C D Refer to the Table above: Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity? Note: Start with a demand and supply curves and identify the initial equilibrium price and quantity. Then, change the demand and supply curves (indicated in the table) proportionally and identify the new equilibrium price and quantity. In some...
Suppose that demand for a good increases and, at the same time, supply of the good...
Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. d. Equilibrium price would increase, but the impact on equilibrium quantity would...
Suppose the price of milk increases and at the same time, the incomes of cheese buyers...
Suppose the price of milk increases and at the same time, the incomes of cheese buyers decrease. Milk is an input in the production of cheese. In addition, we also know that cheese is a normal good. As a result, in the market for cheese Group of answer choices 1.the equilibrium quantity rises and the equilibrium price may increase, decrease, or stay the same. 2.the equilibrium price rises and the equilibrium quantity may increase, decrease, or stay the same. 3.the...
Assume the supply of a good is perfectly elastic and the income elasticity of demand is...
Assume the supply of a good is perfectly elastic and the income elasticity of demand is 16.3. When the income of households increases by 2%, the equilibrium quantity in the market will: Select one: a. increase by 16.3% b. decrease by 16.3% c. increase by 2% d. decrease by 16.3*2% e. increase by 16.3*2%
What happens to equilibrium price as well as equilibrium quantity for a normal good if consumer...
What happens to equilibrium price as well as equilibrium quantity for a normal good if consumer income goes down (ceteris peribus)? a)Eq. price will increase, and eq. quantity will increase b) Eq. price will increase, and eq. quantity will decrease c)Eq. price will decrease, and eq. quantity will increase d) Eq. price will decrease, and eq. quantity will decrease What happens to equilibrium price as well as equilibrium quantity for TV's if a new invention reduces the cost of producing...
QUESTION 23 If the number of demanders for electric cars increases at the same time as...
QUESTION 23 If the number of demanders for electric cars increases at the same time as the number of suppliers of electric cars increases and the shift in demand is equal to the shift in supply, which of the following is true?AND EXPLAIN Both the equilibrium quantity and price will decrease. Both the equilibrium quantity and price will increase. The equilibrium quantity will increase and the equilibrium price will not change. The equilibrium price will decrease and the equilibrium quantity...
QUESTION 1 Event: High Expectations about future income increase consumer spending (short run). Question: What is...
QUESTION 1 Event: High Expectations about future income increase consumer spending (short run). Question: What is the change in aggregate demand? a. Increase b. Decrease c. No change d. Indeterminate QUESTION 2 Event: High expectations about future income increase consumer spending (Short run) Question: What is the change in short run aggregate supply (SRAS)? a. Increase b. Decrease c. No change d. Indeterminate QUESTION 3 Event: High expectations about future income increase consumer spending (Short run) Question: What is the...
Assume there is a simultaneous increase in the number of consumers, a decrease in income (assume...
Assume there is a simultaneous increase in the number of consumers, a decrease in income (assume an inferior good), and an expectation by consumers of a higher price. Which of the following statements is correct a)More information is needed to answer this question. b)The equilibrium price will decrease, and the equilibrium quantity will decrease. c)The equilibrium price will increase, and the equilibrium quantity will decrease. d)The equilibrium price will decrease, and the equilibrium quantity will increase. e)The equilibrium price will...
23. Suppose that in the market for good X (a normal good), the following occur simultaneously:...
23. Suppose that in the market for good X (a normal good), the following occur simultaneously: (i) consumer incomes increase and (ii) the price of oil (an input to the production of X) increases. Which of the following statements is TRUE? a) The equilibrium price of X could either increase or decrease, but equilibrium quantity will definitely decrease. b) The equilibrium quantity of X could either increase or decrease, but equilibrium price will definitely decrease. c) The equilibrium price of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT