QUESTION 6 Market: Pizza Event: Suppose the price of mozzarella increases. Question: What will the change...

QUESTION 6

Market: Pizza

Event: Suppose the price of mozzarella increases.

Question: What will the change to equilibrium quantity be?

a.
Increase

b.
Decrease

c.
No change

d.
Indeterminate

a.
Increase

b.
Decrease

c.
No change

d.
Indeterminate

3 points

QUESTION 18

Market: Duracell Batteries

Event: Suppose the price of Eveready batteries decreases.

Question: What will the change in equilibrium quantity be?

a.
Increase

b.
Decrease

c.
No change

d.
Indeterminate

Market: Automobiles

Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

Question: What is the change in demand?

	a.	Increase
	b.	Decrease
	c.	No change
	d.	Indeterminate

Solutions

Expert Solution

Ans 6 ) rise in price of mozzarella cheese will lead to increase in price of pizza as the cost of pizza has been increased . So the demand for pizza will decline because as price increases the quantity demanded declines as per law of demand.so as demand curve sift left ward ,price increases and equilibrium quantity declines .therefore the answer is part b i.e quantity will decrease .

Ans 18) since Duracell and Eveready battery are perfect substitute to each other , the price change in one good will affect the demand for other good .so as price of eveready decreases , then the quantity for Eveready will increase because people will shift to Eveready and will not buy Duracell .so the quantity of Duracell will decrease , do the correct ans is part b

Ans ) demand is also affected by forecast about price of good .so as in future the price of automobile will rise , do Currently people will rush to buy automobile in order to save money .So the demand will increase . More quantity will be sold and demanded as price are low in current month .correct ans is part A that is demand will increase .

Rahul Sunny answered 2 years ago

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