Question

Last Name, First Name Section (12:30 1, 2:002)1 ECON 202-Principles of Microeconomics Spring 2019 Assignment 2 (20 points) total Due: Thursday January 31t (at the beginning of class) PART 1-Multiple Choice, 10 questions, 1 point each question. There is only one correct answer for each question. You do not need to show your work. 1. The difference between an "inferior" good and a "normal" good in Economics is: The demand for a normal good decreases as the price increases, which is not the case for an inferior good The demand for a normal good increases as the price increases, which is not the case for an inferior good The demand for a normal good decreases as household income increases, which is not the case for an inferior good The demand for a normal good increases as household income increases, which is not the case for an inferior good a. b. c. d. Consider the market for model of supply and demand predict in this market if Zip's decides to lower the prices on all of their hamburgers? 2. McDonald's hamburgers in Moscow. What outcomes does the basic a. b. c. d. Price and quantity of McDonald's hamburgers will both decrease Price and quantity of McDonald's hamburgers will both increase Price of McDonald's hamburgers will increase, quantity will decrease Price of McDonald's hamburger will decrease, quantity will increase Bananas and peanut butter are considered complementary goods because, as everyone kno the combination of these two items is truly a delight for the senses. If this is true, what would you expect to happen to the equilibrium quantity of bananas bought and sold in the market as the price of peanut butter decreases? ws, 3. a. b. c. d. e. It would decrease because of a shift in supply It would decrease because of a shift in demand It would increase because of a shift in supply It would increase because of a shift in demand It would not change because supply and demand effects would cancel each other out workers in the fishing industry successfully negotiate for a higher wage, while at the same time average household incomes in the U.S. increase dramatically. What will happen to the equilibrium price and quantity in the market for fish? 4. Suppose the market for fish (a normal good) in the U.S. is in equilibrium. Then suppose that the @ Price will increase, quantity could increase or decrease b. Price will decrease, quantity could increase or decrease c. Price and quantity both increase d. Price and quantity both decrease e. Price and quantity will both increase

Answer 1

Ans1) the correct option is d) the demand for normal good increases as household income increases which is not the case for an inferior good.

Ans2) The correct option is a) price and quantity of McDonald's hamburger will both decrease.

Because zip has lower prices so the demand for these hamburgers will increase whereas demand for McDonald's hamburger decrease because both are substitutes.

Ans3) the correct option is d) it would increase because of shift in demand.

Because the price of peanut butter has decreased so demand for banana will increase and this will increase both equilibrium price and quantity of bananas.

Ans) the correct option is a) price will increase, quantity could increase or decrease.

Because of the higher wages cost of production will increase so supply decreases. Increase in consumer income will increase demand. Equilibrium price will increase change in equilibrium quantity will be ambiguous.