Question

Refer to the following diagrams for the next NINE questions Select the panel which best depicts the market situation describe

51 a b c d e f Market for DVDs New technology is developed to manufacture DVD players. Panel (1) Panel (2) Panel (3) Panel (

48 a b c d e † Market for avtomobiles with hybrid engines. There is a lasting increase in price of gasoline. Panel (1) Panel

questions 46-53 ... by using the graphs we have to select the best options for each question !

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Answer #1

46)

Inferior goods are those goods whose demand falls when consumer income increases.

The demand curve will shift to the left (decrease). (Panel 2). Equilibrium price and quantity will fall.

47)

When the price for a substitute good is reduced, then demand for soft drink brand X will fall. The demand curve will shift to the left (decrease). (Panel 2). Equilibrium price and quantity will fall.

51) When new technology is developed, supply curve will shift to the right. Equilibrium price will fall and quantity will increase.

(Panel 4).

52) Demand will increase. Demand curve will shift to the right. Supply will fall. Supply curve will shift to the left ( decrease).

An increase in demand and a decrease in supply will cause an increase in equilibrium price, but the effect on equilibrium quantity cannot be determined.

(panel 5).

53)

Demand for red meat will decrease. The demand curve will shift to the left. Supply of red meat will decrease. Supply curve will shift to the left. (Panel 6). If both demand and supply decrease, there will be a decrease in the equilibrium output, but the effect on price cannot be determined.

48) The demand curve will shift to the right (increase). (Panel 1). Equilibrium price and quantity will increase.

49) Supply of American-made automobiles will fall. The equilibrium price will increase and quantity will fall. ( Panel 3).

50) Supply will fall. The equilibrium price will increase and quantity will fall. ( Panel 3).

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