MARKET EQUILIBRIUM 115. Music compact discs are normal goods. What will happen t
ID: 1135123 • Letter: M
Question
MARKET EQUILIBRIUM 115. Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact dise players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income? a. Price will fall and the effect on quantity is ambiguous. b.Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous 116. What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold? a. b. c. d. Price will rise. Price will fall. Price will stay exactly the same. The price change will be ambiguous. 117. New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of wood saws increased? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous d. Quantity will rise and the effect on price is ambiguous. 118. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts fewer firms decided to produce peanut butter, and health officials went up, the price of jelly fell, announced that eating peanut butter was good for you? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Quantity will rise and the effect on price is ambiguous. 119. Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous. 120. What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources nee to manufacture traditional film falls, and more firms decide to manufacture traditional film? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. d. Quantity will fall and the effect on price is ambiguous. Quantity will rise and the effect on price is ambiguous.Explanation / Answer
Ans115) D is the correct option. quantity will rise and the effect on price is ambiguous. Because of the lower royalties and cheap labor, the Cost of production will decrease which will lead to increase in supply. Because of the increase in income of music lovers the demand will increase. The quantity will increase but can't say anything about the price until the magnitude of change is given.
Ans116) D is the correct option. price change will be ambiguous. Demand for new textbooks will increase and supply for textbooks will increase so the quantity will increase but can't say anything about the price.
Ans117) B is the correct option. price will rise and the effect on quantity is ambiguous. The demand will increase and the supply will decrease so the equilibrium price will rise and can't say anything about the quantity.
Ans118) B is the correct option. price will rise and the effect on quantity is ambiguous. Demand for peanut butter increases and supply decreases so there is an increase in equilibrium price and the change in quantity is ambiguous
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