Question

1. The government imposes a tax on all soft drinks that contain sugar in Philadelphia County. Therefore,

Group of answer choices

a. supply will decrease

b. quantity demanded will decrease

c. demand will decrease

d. quantity supplied will decrease

2. The price of earbuds increase $10. Therefore,

Group of answer choices

a. the demand increases

b. the demand decreases

c. the quantity supplied increases

d. the quantity demanded decreases

Answer 1

1.

Since the law of supply stats that there is a direct relationship between price and quantity supplied and other factors which affect the supply remains same.

The supply curve shows the direct relationship between price and quantity supplied. The determinants are;

Technology, costs of inputs and number of potential suppliers.

When there is change in its own price, then there will be movement along the supply curve while when there is a change in the factors other than price, there will be shifts in the supply curve.

The government imposes a tax on all soft drinks that contain sugar in Philadelphia County. Therefore supply will decrease.

Hence option a is the correct answer.

2.

Since the law of demand stats that there is an opposite relationship between price and quantity demanded and other factors which affect the demand remains same.

The demand determinant are;

Its own price, price of substitute goods, price of complementary goods, income of the consumer and taste and preferences of the consumers.

The change in the quantity demand arises when price of the goods changes and there will be change in the demand when factors other than price changes.

When the price of earbuds increase $10. Therefore the quantity demanded decreases.

Hence option d is the correct answer.