Suppose that iPhones are normal goods. If the income of iPhone users decreases, you predict that in the market for iPhones
A. both equilibrium price and quantity will increase.
B. both equilibrium price and quantity will fall.
C. equilibrium price will fall but quantity will increase.
D. equilibrium price will increase and quantity will decrease.
Answer: B
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Medical authorities announced in the late 1980s that an acne medicine named Retin-A also had previously unknown wrinkle-reducing properties. An economist would expect to find that, after this announcement, the price of Retin-A ____ and the quantity sold ____
a. rose; fell b. rose; rose c. fell; fell d. fell; rose
A family friend is shopping for an exclusive Vera Wang wedding gown for $8,000 but feels that the price is excessive. She argues that the company should lower prices not only to benefit customers but also to increase the company's revenues and profits. What has she assumed about the price elasticity of demand for these gowns? Is her assumption likely to be correct or incorrect? Why?
As price increases, additional suppliers are willing to produce a commodity
a. True b. False Indicate whether the statement is true or false
If goods A and B are considered substitutes, a decrease in the price of A would cause
A. a movement along the demand curve for B to a (lower price, higher quantity) point. B. the demand curve for B to shift to the left. C. a movement along the demand curve for B to a (higher price, lower quantity) point. D. the demand curve for B to shift to the right.