View the step-by-step solution to:

In a competitive market for an inferior good we have a fall in the price of an intermediate good used in production and a fall in expected future...

In a competitive market for an inferior good we have a fall in the price of an intermediate good used in production and a fall in expected future household income. Ceteris paribus, we can predict that:
a) the price of the good will rise, but we cannot make a prediction regarding quantity sold without
further information.
b) the quantity sold of the good will rise, but we cannot make a prediction regarding the price of
the good without further information.
c) the quantity sold of the good will fall, but we cannot make a prediction regarding the price of
the good without further information.
d) The price of the good will fall, but we cannot make a prediction regarding quantity sold without
further information.
e) None of the above are correct.

Answer is B. Could you explain why?

In a competitive market for a normal good an excise tax is imposed and the price of a substitute good rises. Ceteris paribus, we can predict that
a) the price of the good will rise, but we cannot make a prediction regarding quantity sold without
further information.
b) the quantity sold of the good will rise, but we cannot make a prediction regarding the price of
the good without further information.
c) the quantity sold of the good will fall, but we cannot make a prediction regarding the price of
the good without further information.
d) The price of the good will fall, but we cannot make a prediction regarding quantity sold without
further information.
e) None of the above are correct.
Answer is A could you explain why?

20. In a competitive market for a normal good we have an increase in the price of a complementary good and improved technology in production. Ceteris paribus, we can predict that
a) the price of the good will rise, but we cannot make a prediction regarding quantity sold without
further information.
b) the quantity sold of the good will rise, but we cannot make a prediction regarding the price of
the good without further information.
c) the quantity sold of the good will fall, but we cannot make a prediction regarding the price of
the good without further information.
d) The price of the good will fall, but we cannot make a prediction regarding quantity sold without
further information.
e) None of the above are correct.
Answer is D. Could you explain why?

21. In a landmark antitrust case, U.S. vs Alcoa Aluminum, the Justice Department argued that Alcoa was in violation of the Sherman Act: it could monopolize the market for aluminum. Alcoa conceded that it had an overwhelming market share in the aluminum market, but countered that the “relevant market” was not aluminum, but building materials. Its share of the broader building materials market was much smaller, giving it little monopoly power. Expert witnesses testifying for Alcoa calculated and reported cross price elasticities of demand for aluminum with respect to prices of other materials (e.g., steel) that could be used instead of aluminum in building projects. Their testimony supports Alcoa’s argument if these estimated cross price elasticities are:
a) negative b) zero c) positive d) statistically significant
Answer is C. Could you explain why?

Consumers consider bagels and cream cheese to be complements. A fall in the price of bagels and fall in the quantity sold of cream cheese would result from:
a) a rise in the price of milk c) a fall in the price of flour
b) a rise in the price of flour d) a fall in the price of milk
Answer is an A. Could you explain why?

32. Consumers consider bagels and cream cheese to be substitutes. A fall in the price of bagels and fall in the quantity sold of cream cheese would result from:
a) a rise in the price of milk c) a fall in the price of flour
b) a rise in the price of flour d) a fall in the price of milk
Answer is C. Could you explain why?

33. Price elasticity of demand, in absolute value, will decrease in face of:
a) an increase in the number of substitutes.
b) an increase in the percentage of income spent on the good.
c) an increase in the time that lapses following a change in price.
d) All of the above are correct.
e) None of the above are correct.

Answer is E. Could you explain why?


Sign up to view the entire interaction

Top Answer

I hope you'll direct your future work to me if... View the full answer

8542263.doc

In a competitive market for an inferior good we have a fall in the price of an intermediate good
used in production and a fall in expected future household income. Ceteris paribus, we can
predict...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online