Question

Question 6 (10 points) Suppose that the demand decreased for 4K TVs and, at the same time, the supply of 4K TVs increased. What would happen in the market of 4K TVs? Equilibrium price would decrease, but the impact on the equilibrium quantity would be ambiguous Equilibrium price would increase, but the impact on the equilibrium quantity would be ambiguous Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

Answer 1

6. When demand for 4K TVs has decreased ,demand curve for 4K TVs shifts leftward . As a result , equilibrium price decrease and equilibrium quantity decrease . And at the same time when supply of 4K TVs has increased , supply curve shifts rightward. As a result, equilibrium price would decrease and equilibrium quantity would increase. By combining these two effects , overall equilibrium price would decrease but the impact on the equilibrium quantity would be ambiguous. Hence , option(A) is correct.

7. TRUE others remaining unchanged ,the demand for normal products is expected to increase when buyer's income go up.

8. FALSE because When other things remain equal , buyers are expected to stock less from the normal product that they expect its market price to decline significantly in the soon future. Buyers will buy more in the future.

9. TRUE Others things being equal ,a shortage from soda is expected if both buyers and sellers believed the forecast that predicted a significant decline in the market price of soda.

10. Peanut butter and jelly are complementary goods. If price of peanut butter goes up, demand for jelly decreases. Therefore, demand curve for jelly shifts leftward , as a result, market price of jelly will fall. Hence, option(C) is correct.