Question

3. In which of the following cases will the effect on equilibrium price be indeterminate (i.e., depend on the magnitudes of the shifts in supply and demand)? a. Demand increases and supply increases. b. Demand decreases and supply decreases c. Demand decreases and supply increases.d. Demand increases and supply decreases.e. more than one of the above.

4. Assume that good X and good Y are substitutes in consumption. Additionally, they are complements in production. Suppose that the price of good Y decreases, as a result the price of good X will

a.Rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of good X would fall.

b.Rise, fall, or remain unchanged depending on the magnitude of the changes, but the equilibrium quantity of good X would increase.

c. Rise, but the equilibrium quantity of good X would rise or fall or remain the same depending on the magnitude of the changes.

d. Rise, but the equilibrium quantity of good X would fall.

e. Fall, but the equilibrium quantity of good X would rise or fall or remain the same depending on the magnitude of the changes.

Answer 1

a) "C"

In case of a decrease in the demand in the market and an increase in the supply in the market the equilibrium price will be indeterminate.

b) "E"

It will lead to a fall in the equilibrium price in the market and quantity output will be indeterminate.