If the price of a good increases, then Select one: A. the demand for complementary goods will increase. O B. the demand for the good will increase C. the demand for the good will decrease O D. None of the above

If the price of a good increases, then Select one: A. the demand for complementary goods will increase. O B. the demand for the good will increase C. the demand for the good will decrease O D. None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.

Question

If the price of a good increases, then
Select one:
O A. the demand for complementary goods will increase.
O B. the demand for the good will increase
O c. the demand for the good will decrease
O D. None of the above

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Using the graph, determine the type of good X. The price increases from Po to P₁. The substitution effect is illustrated by the change in quantity demanded from A to B; the income effect is illustrated by the change in quantity demanded from B to C. Good X is certainly a(n) good. OA. Giffen B. luxury C. inferior D. normal E. necessity P₁ Price Po C B 00 Good X A D Quantity
Think Critically a. Use the data below to construct a demand curve for pizza. Price Quantity 14 100 12 200 10 300 8 400 6 500 b. Explain two (2) reasons why the demand curve has a negative slope. c. For each of the following situations relating to the demand for pizza. identify the factor affecting demand demonstrate on the axes provided, and explain, the effects of the change. (I)an increase in the price of hamburgers Factor: ___________________________________ Explanation: ______________________________ (II) a media report announces that eating pizza increases the risk of heart disease Factor: ___________________________________ Explanation: ______________________________ d. What role does price play in the market and how does the type of market impact on the determination of price?
Answer
Answer the following questions
If goods A and B are substitutes, an increase in the price of A will result in Select one: a. no difference in the quantity sold of either good O b. None of the answers are correct O c. increases the demand for O d. reduces the demand for B
The distinction betwoen a nomal and an inferior good is O A. when income increases, demand for a normal good increases while demand for an inferior good fals O B. when income increases, demand for a normal good decreases while demand for an infenor good increases C. normgoods are used together while inferior goods are used for the same purposes OD. normal goods are used for the same purposes while inferior goods are used together.
3. As coffee becomes more expensive, Jamal starts drinking tea, therefore quantity demanded for coffee decreases. This is called a. the income effect. b. the change in equilibrium. c. the substitution effect. d. a shift in the demand curve.
What causes the shift in the budget below, from budget Bo to B₁? Good A B₁ Bo Good C O A decrease in the price of good C A decrease in consumer income An increase in the price of good C O A decrease in the price of good A
1. Which of the following is NOT true of a demand curve? a. It has negative slope. b. It shows the amount consumers are willing and able to purchase at various prices, holding other factors constant. c. It relates the price of an item to the quantity demanded of that item. d. It shows how an increase in price leads to an increase in quantity demanded of a good.
8 When the price of a pizza slice decreases from $2 to $1, the case should be in a way the None of the answers given here is correct. income effect means elasticity of demand increases from 1 to 2. quantity demanded of pizza will not change. substitution effect means people buy more pizza. O income effect means elasticity of income increases from 1 to 2.
A decrease in the supply of a product most likely would be caused by O An increase in business taxes O A decrease in resource costs for production O A decrease in the price of a complementary good O None of the above