Suppose that a new advertising campaign extolling the virtues of apple juice is successful, and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?
A. The equilibrium price of apple juice might rise or fall and the equilibrium quantity of apple juice falls.
B. The equilibrium price of apple juice might rise or fall and the equilibrium quantity of apple juice rises.
C. The equilibrium price of apple juice rises and the equilibrium quantity of apple juice might rise or fall.
D. The equilibrium price of apple juice falls and the equilibrium quantity of apple juice might rise or fall.
Answer: C
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a. shifts the aggregate supply curve. b. must reflect a change in the anticipated changes in the economy. c. shifts the aggregate demand curve. d. both a and b. e. none of the above.
Assuming that turkey, chicken, pork, and beef are substitutes, suppose that the price of turkey has fallen. This will, other things being equal
A) reduce demand for chicken, pork, and beef. B) leave demand for chicken, pork, and beef unchanged. C) increase demand for chicken, pork, and beef. D) increase quantity demanded of beef.
If a group of sellers that can restrict entry into a market, they will often be able to enlarge their total profit by
a. raising price and reducing output. b. raising price and expanding output. c. lowering price and expanding output. d. raising price and leaving output unchanged.
An example of an incentive designed to promote savings would be
A. a decrease in the exclusion from taxable income of the first $100 of dividends. B. an increase in the sales tax. C. an increase in the capital gains tax rate. D. a tax provision that reduces the effective interest rate garnered by savings.