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Unformatted text preview: bought and sold of corn. 5. When energy prices increase it causes price of steel an input in car production to increase as well. This results in an increase in the cost of making cars, thereby the supply curve for cars shifts to the left (decreases). The new price of cars will be higher and quantity lower compared to the old equilibrium. 6. d. a decrease in income 7. Price ceilings are legal maximum prices. Eg, housing rent controls. Price floors are legal minimum prices. Eg. Minimum wages. 8. The law of demand states that there exists an inverse relationship between price and quantity demanded of the product, ceteris paribus. 9. If broccoli and cheese are complements, and price of cheese decreases, then equilibrium price and quantity of broccoli will go up....
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- Spring '08