Draw in a new demand curve, D1, on the graph, showing a decrease in demand What happens to price and quantity?
Equilibrium price falls and equilibrium quantity falls.
You might also like to view...
If the price of a good is decreased and total revenue received from the sale of this good does not change, then the price elasticity of demand for the good is
A) elastic. B) inelastic. C) unitary. D) None of the above
When purchasing autos and other durable goods, consumers tend to use discount rates that are inversely proportional to their income, so the discount rates are lower for consumers with higher income. The key reason for this behavior is that:
A) lower income consumers face very strict cash constraints, and they expect these problems to get worse in the future. B) high income consumers tend to have lower opportunity costs for money. C) high income consumers tend to make long-term investments (e.g., 30-year bonds), which always pay lower interest rates than short-term investments. D) none of the above
Which of the following defines the face value of a bond?
a. The amount that the bond issuer agrees to pay the investor b. The rate of return a bond is expected to pay at the time of purchase c. The current price of a bond at a given time d. The interest rate paid on a bond either annually or semi-annually
Which of the following statement is FALSE?
A. Only the price system can be used to ration goods. B. Coupons can be used to ration goods. C. Random assignment can be a method of rationing. D. Queuing can be used for rationing.