Refer to the accompanying figure. Suppose the solid line shows the demand for coffee. If coffee and tea are substitutes, and the price of tea falls, then you would expect:
A. an increase in the quantity of coffee demanded, but no shift in the demand curve.
B. a decrease in the quantity of coffee demanded, but no shift in the demand curve.
C. the demand curve to shift to D(B)
D. the demand curve to shift to D(A).
Answer: D
You might also like to view...
If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities frontier is
A. a vertical line. B. an upward-sloping line. C. a straight horizontal line. D. a straight downward-sloping line.
Refer to Figure 4.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 15, the price must be
A) $0. B) $6. C) $9. D) $15.
Why is the production possibilities frontier (PPF) typically bowed-outward? Under what circumstances would the PPF be a straight line?
If the exchange rate between the U.S. dollar and the Japanese yen is $1 = 200 yen, then the dollar price of yen is
A. $.005. B. $.05. C. $.50. D. $5.