1. Suppose that goods A and B are close substitutes. If the price of good A decr
ID: 1140440 • Letter: 1
Question
1. Suppose that goods A and B are close substitutes. If the price of good A decreases, then we would expect an
increase in the demand for A and an increase in the quantity of B demanded.
increase in the demand for A and a decrease in the quantity of B demanded (wrong answer)
increase in the quantity of A demanded and a decrease in the demand for B.
2. Use the following graph of the demand for noodles to answer the question below.
Refer to the three demand curves for noodles and assume noodles are an inferior good. Which of the following would shift the demand for noodles from D1 to D2?
increase in the demand for good A as well as for good B.
an increase in the price of noodles
an increase in consumer incomes ( wrong answer)
a decrease in consumer incomes
a decrease in the price of noodles
$5. 3 D, 0 2 4 6 8 10 12 14 16 18 20 Quantity Demanded (thousands of pounds per week)Explanation / Answer
Solution -
1.
Option C. increase in the quantity of A demanded and a decrease in the demand for B. is Correct Option
Reason - Good A's demand will increase the demand for good A, which is affected by its own value. A good B is a substitute, because of the low price of good A. B will decrease the demand for good demand, which can change the prices of related goods.
2.
Option C.a decrease in consumer incomes is Correct Option .
Reason -When its Shift Toward the right is always decrease in consumer income
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