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4. [3 Marks] You have noticed an increase in both the (equilibrium) price and quantity transacted of a good. Which of the following is a plausible explanation? A. Incomes have fallen and the good is an inferior good. B. A price of a close substitute has fallen. C. There has been an improvement in the technology used to produce this good. D. The price of a key input used in this good's production has increased. E. The price of a key input used in this good's production has decreased.

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Elin Hessel
Elin HesselLv2
9 Mar 2018
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Principles of Economics
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ISBN: 9781947172364
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Related questions

62) Suppose we observe both an increase in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation? A) The law of supply is violated. B) The demand for A has decreased. C) The supply of A has increased. D) The supply of A has decreased. E) The demand for A has increased.

a. What effect will each of the following have on the DEMAND for coffee (i.e. Increase Demand, Decrease Demand, or NO CHANGE)?

i. There is an increase in the price of coffee.

ii. There is an increase in the price of tea, which consumers view as a substitute for coffee.

iii. There is an increase in consumer incomes, assuming coffee is a normal good.

iv. There is a decrease in the number of consumers who buy coffee.


B. a. What effect will each of the following have on the SUPPLY of soybeans? (i.e. Increase Supply, Decrease Supply, or NO CHANGE)?

i. There is an increase in the amount of subsidies given to soybean producers.

ii. There is a decrease in the price of fertilizer, an input needed to produce soybeans.

iii. There is an increase in the price of corn, an alternative good that soybean producers could produce instead of soybeans (i.e. assume corn is a substitute in production for soybeans).

iv. Soybean producers expect the price of soybeans to substantially fall in the future.



Please also give me explanations as to why.

2. A newspaper reports that in an urban area the average price of new homes has decreased, but the number of new homes sold has increased. This situation would best be explained by a:

Select one:

a. decrease in demand (all else constant).

b. increase in supply (all else constant).

c. decrease in supply (all else constant).

d. increase in demand (all else constant).

3. You see online that GDP increased by 3%. This tells you that:

Select one:

a. the amount of government spending increased by 3%

b. the value of output produced within the country increased by 3%

c. The number of jobs in the economy increased by 3%

d. The prices of goods and services increased by 3%

4. When measuring the value of a good for the purposes of GDP, economists use:

Select one:

a. The amount of labor used to produce good

b. The market price the good sold for

c. The amount of dollars the firms spent in making the good

d. The price of the good minus the cost of production

5. Which statement accurately expresses the law of supply?

Select one:

a. Holding all else the same, as price increases the quantity supplied decreases

b. Supply is limited because the factors of production are limited

c. Holding all else the same, as price increases the quantity supplied increases

d. The supply of a given good cannot exceed the demand for that good.

6. A good purchased by the end-user of that good is called a final good.

Select one:

True

False

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