In Figure 3-7, suppose D1 and S1 indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D1 to D2 in the market for ice cream?
a. a decrease in the price of sugar, an ingredient used to produce ice cream
b. an increase in the price of frozen yogurt, a substitute for ice cream
c. abnormally cold weather that decreased consumer desire for ice cream
d. an increase in the price of milk, an ingredient used to produce ice cream
c. abnormally cold weather that decreased consumer desire for ice cream
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Suppose that Year 1 is the base year. What is the growth rate of GDP?
A) 35% B) 55% C) 70% D) 110%
If the price of "X" increases and you buy more "Y," then
A. "X" and "Y" are complements, and the price of "Y" will decrease. B. "X" and "Y" are substitutes, and the price of "Y" will decrease. C. "X" and "Y" are complements, and the price of "Y" will increase. D. "X" and "Y" are substitutes, and the price of "Y" will increase.
Illustrate and explain the effects of tax reduction and simplification using the dynamic aggregate demand and supply model. To simplify the analysis, assume that aggregate demand is not affected by the tax cut
What will be an ideal response?
Explain why a monopoly that knows the demand curve of identical consumers can set a two-part tariff with the lump sum tariff equal to the total amount of potential consumer surplus
What will be an ideal response?