Quiz 1 - 1.A. The supply of bicycles would be expected to...

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1.A. The supply of bicycles would be expected to decrease since it will cost the suppliers more to make the product. B. The demand for bicycles will remain the same since the change in labor costs is a supply factor and not a demand factor. 2. A. As the price of jelly falls the demand for peanut butter would increase, due to the fact that the demand for jelly would increase. This is due to the fact that they are compliments in consumption to consumers. This of course is based on the assumption that the price of peanut butter is not changing. B. As the price for jelly falls the demand for jelly would increase 3. A. The supply of new homes would remains unchanged given that a change in quantity supplied is not the same as a change in supply. My understanding of this is that the number of new homes does not change just because the number of sellers changes. There is simply a change in the amount of new homes for sale. B. The demand for new homes remains the same as the change in sellers is a supply factor and not a demand factor. 4. A. An increase in supply reduces equilibrium price P* B. If there is a decrease on both demand and supply, the equilibrium quantity Q* will also decrease. C.
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.

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Quiz 1 - 1.A. The supply of bicycles would be expected to...

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