Question

In the market for peaches, we observe both market equilibrium price and quantity increase.  What could have caused this change?

a.an increase in supply and a decrease in demand

b.an increase in demand

c.an increase in supply

d.a decrease in supply

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A decrease in the price of inputs into production causes:

a.market supply to decrease, driving market equilibrium price down

b.market supply to increase, increasing market equilibrium price

c.market supply to increase, decreasing market equilibrium price

d.quantity supplied to increase, raising market equilibrium price

A decrease in the price of vacuum cleaners causes a decrease in the total revenue of vacuum cleaner manufacturers. The price elasticity of demand for vacuum cleaners is:

a.positive and elastic

b.inelastic

c.elastic

d.positive and inelastic

Gus often makes his own salad for lunch.  He prefers to use either iceberg or romaine lettuce, topped off with lots of fresh tomatoes.  The cross price elasticity of demand for iceberg lettuce with respect to romaine lettuce is _______________ and the cross price elasticity of demand for iceberg lettuce with respect to tomatoes is _______________.

a.positive; negative

b.negative; positive

c.zero; positive

d.negative; zero

If a 5% increase in income increases quantity demanded by 4%, the income elasticity of demand is:

a.1.25

b.0.8

c.1.0

d.0.01

Answer 1