Why does the quantity demanded decrease when the price of a good increases?
A. People choose to reduce consumption of the item.
B. People “drop out” of the market for the item.
C. People find substitutes for the item.
D. All of these responses are correct.
Answer: D
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The cranberry market is perfectly competitive. Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries
As time passes, the price of cranberries ________ and the initial firms' economic ________. A) falls; profit will be eliminated B) rises still higher; loss will be eliminated C) rises still higher; profit will not change D) falls; loss will be increased E) falls; profit will not change
After getting a raise at work, Jasper now regularly buys steak instead of chicken. Which factor of demand has influenced Jasper's demand for steak?
A. Price of a substitute good B. Price of a complementary good C. Income D. Preferences
Which of the following is the most sensitive to interest rate changes?
a. The demand for non-durable goods. b. The demand for inexpensive goods. c. The demand for durable goods. d. The demand for necessities. e. The demand for services.
Use the following graph to answer the next question.
If the interest rate rises from 2% to 3%, the supply of money must have
A. decreased by $100 billion. B. increased by $50 billion. C. decreased by $50 billion. D. decreased by $150 billion.