Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause
A) an increase in the demand for coffee.
B) a decrease in the demand for coffee.
C) a leftward shift of the demand curve for tea.
D) a leftward shift in the demand for coffee.
Answer: A
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If the Fed wanted to increase the money supply, they could:
A. decrease the reserve requirement, reducing the reserve ratio. B. increase the reserve requirement, reducing the reserve ratio. C. increase the reserve requirement, increasing the reserve ratio. D. decrease the reserve requirement, increasing the reserve ratio.
Costs of renewing contracts or printing new price lists are known as
A. implicit economic costs. B. operating costs. C. menu costs. D. opportunity costs.
All of the following would increase the growth rate of the economy EXCEPT
A) raising the saving rate. B) stimulating research and development. C) discouraging international trade. D) None of the above answers is correct because they all would increase the growth rate.
Recall this discussion from the text. The supply of 20-year-old French wine has a price elasticity of supply of
a. 1.00 b. -1.0 c. 0 d. infinity e. 20