Which of the following statements is(are) correct? Group of answer choices Assume that goods A and...

Which of the following statements is(are) correct?

Group of answer choices

Assume that goods A and B are substitutes. Suppose a technology improvement in the production of good A and an increase in the price of good B. If everything else remains the same, in the market of good A, the equilibrium price decreases but the effect on the equilibrium quantity depends on the magnitudes of the shifts in supply and demand

Assume that goods M and N are complements. Suppose the number of sellers of good M increases and suppose an increase in the price of good N. If everything else remains the same, in the market of good M, the equilibrium price decreases but the effect on the equilibrium quantity depends on the magnitudes of the shifts in supply and demand

Suppose that on the market for good X you observed that the equilibrium price has increased. The only change that has happened in that market is that the income of the consumers has decreased. Therefore, good X is a normal good.

Expert Solution

Assume that goods A and B are substitutes. Suppose a technology improvement in the production of good A and an increase in the price of good B. If everything else remains the same, in the market of good A, the equilibrium price decreases but the effect on the equilibrium quantity depends on the magnitudes of the shifts in supply and demand

False - Increase in price of good B leads to increase in demand for good A. So effect on price is indeterminate.

Assume that goods M and N are complements. Suppose the number of sellers of good M increases and suppose an increase in the price of good N. If everything else remains the same, in the market of good M, the equilibrium price decreases but the effect on the equilibrium quantity depends on the magnitudes of the shifts in supply and demand

True

Suppose that on the market for good X you observed that the equilibrium price has increased. The only change that has happened in that market is that the income of the consumers has decreased. Therefore, good X is a normal good.
False - As demand increased due to increase in income, it means it is an inferior good

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Rahul Sunny answered 1 year ago

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