Economics
101
Fall 2001
Answers for Practice Problems #2
If Energizer increases the price of its batteries, consumers will switch over to substitutes such as Duracell, increasing the demand for Duracell. This will raise both equilibrium price and quantity.
An increase in price results in an increase in quantity supplied. Suppliers are able to produce more because, at the higher price, they can afford to hire more-expensive resources.
3. c
Draw the supply curve. At the same output level and at a higher price, the supply curve has shifted to the left—a decrease in supply.
4. c
Tastes and preferences are determinants of demand, not supply.
5. c
A “change in demand” means that, at every price level, more or less is being demanded. This is represented as a shift in the position of the demand curve.
6. c
A decrease in the demand for tennis racquets will occur if a complement( tennis balls) increases in price because fewer tennis balls will be bought.
7. c.
According to the definition and characteristics of the demand curve.
8. a
There is a negative relationship between price and quantity demanded.
9. d.
Remember that a change in “quantity demanded” can only be due to a change in the price of the good.
10. a.
Suppose A is Coke and B is Pepsi. If Coke rises in price, we would buy less Coke (A fall in quantity demanded of Coke ) and more of Pepsi (an increase in the demand for Pepsi)