In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good
a. The population decreases and productivity increases
b. Income increases and the price of inputs increase
c. The number of firms in the market decreases and income decreases
d. Consumer preference decreases and the price of a complement increases
e. The price of a substitute in consumption increases and the price of a substitute in production increases
a. Price decreases; Quantity may increase or decrease
b. Quantity decreases; Price may increase or decrease
c. Price increases; Quantity may increase or decrease
d. Price decreases; Quantity decreases
e. Price increases; Quantity may increase or decrease
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The Phillips curve relates the inflation rate to
a. the unemployment rate. b. GDP. c. disposable personal income. d. the interest rate.
A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.
If the market price of grills falls from $375 to $330, given the scenario described, which of the following can be said? A. Butch will join the market, but receive no consumer surplus. B. Butch and Collin will join the market, and together will receive $30 in consumer surplus. C. Abe will experience a decrease in consumer surplus of $45. D. Abe will experience an increase in consumer surplus of $45.
If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?
a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Holding other factors constant, if terrorist attacks increase the desire for precautionary saving, then the real interest rate will ________ and the equilibrium quantity of saving and investment will ________.
A. decrease; increase B. increase; increase C. increase; decrease D. decrease; decrease