How would a decrease in consumer income affect the market for new automobiles, a normal good?
A. Demand would decrease, leading to an increase in price and a reduction in quantity sold.
B. Demand would decrease, leading to a reduction in price and a reduction in quantity sold.
C. Demand would increase, leading to an increase in price and an increase in quantity sold.
D. Demand would increase, leading to a reduction in price and an increase in quantity sold.
Answer: B
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How does the concept of elasticity allow us to improve upon our understanding of supply and demand?
a. Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept. b. Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus. c. Without elasticity, we would not be able to address the direction in which price is likely to move in response to a shortage. d. Without elasticity, it is very difficult to assess the degree of competition within a market.
People have a portfolio demand for money in part because:
A. money is needed to pay brokerage commissions. B. there is no cost to holding money which gives it a relatively high return. C. money is part of a well-diversified financial portfolio. D. the return on money is often higher than other financial assets.
The definition of gross domestic product is
A. the total value of all sales in the economy. B. the total value of production in the domestic economy plus the production of domestic firms in foreign countries. C. the total value of all sales of final and intermediate goods in the domestic economy. D. the total of the money values of all final goods and services produced in the domestic economy within a specific time period.
The relative price of a smartphone is
A) the money price of the smartphone divided by the money price of some other good. B) the price of the smartphone compared with what students think it should cost. C) the amount it cost to make the smartphone. D) what the company earned for selling the smartphone.