ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The equilibrium price and quantity of ties will increase
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The equilibrium price and quantity of ties will decrease
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The supply of ties will increase
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The demand for ties will increase.
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Detailed explanation-1: -If shirts and ties are complements and if the price of shirts increases due to an increase in the price of cotton, which of the following is most likely to occur in the market for ties in the short run? The demand for ties will increase.
Detailed explanation-2: -A decrease in supply will cause the equilibrium price to decrease, the equilibrium quantity to increase, and consumer surplus to decrease.
Detailed explanation-3: -Answer and Explanation: Red meat is a substitute to chicken. Therefore, the cross-price elasticity of demand between chicken is positive meaning that the demand for chicken will decrease when the price of red meat decreases as consumers will prefer purchasing red meat at a relatively lower price.
Detailed explanation-4: -Two reasons why the demand curve slopes downward are the substitution effect and the income effect. The income effect states that when the price of a good decreases, it is as if the buyer of the good’s income went up.
Detailed explanation-5: -Ceteris paribus, which of the following would you expect to have no effect on the demand curve for new automobiles? An increase in the price of new automobiles.