AME: Exhibit 4 Supply and demand curves for computers S, Price per3 computer (th

Question

AME: Exhibit 4 Supply and demand curves for computers S, Price per3 computer (thousands of dollars) 2- 1020[ Quantity of computers 40 (hundreds per week) An increase in both supply and demand causes which of the following? a. Equilibrium price falls. b. Equilibrium price rises. c. Equilibrium price change is indeterminate. d. Equilibrium quantity decreases e. Equilibrium quantity change is indeterminate. 20. Exhibit 3 Demand curves Graph A Graph B PriceP (dollars) P (dellaes) P Quaarity (units per time period) Quantity (units per time period) Graph C Graph D idollars) P a, Q, Quantity units per time period) (units per time perod Which of the graphs in Exhibit 3 depicts the effect of a decrease in the price of pizza on the demand curve for pizza? a. Graph A b. Graph B c. Graph C d. Graph D 21

Explanation / Answer

20> c

If demand rises, price rise. If supplies rise, price falls, thus the change in price will be indeterminate.

21> Graph B

Since this is a price decrease in the demand curve it will not reflect a shift in the demand curve but a movement along the demand curve.

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