When the product price for a consumer goes up,

supply decreases

demand decreases

quantity demanded decreases

quantity demanded increases

Question 2

Suppose taxes on businesses and on consumer households are increased in an attempt to balance the budget and help save entitlement programs like Social Security. What effect would these taxes have on supply and demand?

supply decrease, demand decrease

supply decrease, demand increase

supply increase, demand decrease

supply unchanged, demand unchanged

Question 3

Suppose demand is perfectly price elastic and supply increases. What happens to price?

depends on the shift

nothing

increases

decreases

Question 4

A severe recession hits causing many to lose jobs and have decreased income. We notice more people shopping at dollar stores. Goods sold at dollar stores are what type of good?

normal goods

inferior goods

complement goods

substitute goods

Question 5

A price ceiling is located_____________________ equilibrium and causes____________________

because at that nonequilibrium price________________________

below; a shortage; quantity demanded>quantity supplied

above; a surplus; quantity demanded>quantity supplied

above; a surplus; quantity demanded>quantity supplied

below; a shortage; quantity supplied>quantity demanded

Question 6

A 10% increase in price of good x, leads to a 20% drop in quantity demanded of good y. What type of good is good y?

normal good

inferior good

complement

substitute

Question 7

Gasoline has a price inelastic supply and a price inelastic demand. Suppose demand increases. What changes the most in the short run?

price

deadweight losses

quantity

supply