111.If coffee and cream are complements, an increase in the price of coffee will causea.the demand for cream to increase.b.the demand for cream to fall.c.the demand for coffee to fall.d.no change in the demand for cream; only quantity demanded would be affected.ANS:BPTS:1DIF:EasyNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Application112.The current demand for a good would decrease ifa.the price of a complementary good rose.b.the price of a substitute good rose.c.consumers suddenly believed the price of the good would be sharply higher in the future.d.consumer income increased.ANS:APTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Comprehension113.Which of the following would most likely increase the demand for televisions?a.a decrease in the price of televisionsb.a decline in consumer incomec.a decrease in the price of home stereo systems, a substitute for televisionsd.a decrease in the price of DVD players, a product that is complementary with televisionsANS:DPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Application114.If an increase in the price of good X causes the demand for good Y to decrease, this indicates thata.X and Y are complements.b.X and Y are substitutes.c.X and Y are unrelated.d.the demand for X is elastic, but the demand for Y is inelastic.ANS:APTS:1DIF:EasyNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Comprehension115.Assume that eggnog and cookies are complements. If the price of eggnog goes up, what happens to thedemand for cookies?a.demand for cookies increasesb.demand for cookies decreasesc.demand for cookies remains unchangedd.the shift in demand will depend on the original price of cookiesANS:BPTS:1DIF:EasyNAT:BUSPROG: Analytic Show STA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Application116.If salsa and nacho chips are complements, an increase in the price of nacho chips woulda.increase the price of salsa.b.decrease the demand for salsa.c.increase the demand for salsa.d.have no effect on the demand for salsa.ANS:BPTS:1DIF:EasyNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: Application 363.If coffee and cream are complements, a decrease in the price of coffee will causea.the demand for cream to decrease.b.the demand for cream to increase.c.the demand for coffee to increase.d.no change in the demand for cream; only quantity demanded would be affected.ANS:BPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Changes in Demand Versus Changes in Quantity DemandedKEY:Bloom's: ApplicationMSC: Coursebook364.If the market price is above the equilibrium price, there will be a tendency for price to decrease, causinga.the quantity demanded to decrease and the quantity supplied to increase until they areequal.b.the quantity demanded to increase and the quantity supplied to decrease until they areequal. c.both quantity demanded and quantity supplied to decrease until they are equal.d.both quantity demanded and quantity supplied to increase until they are equal.ANS:BPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:How Markets Respond to Changes in Demand and SupplyKEY:Bloom's: ComprehensionMSC: Coursebook365.According to the law of supply, as the price of a good decreasesa.buyers will buy more of the good.b.sellers will produce more of the good.c.buyers will buy less of the good.d.sellers will produce less of the good.ANS:DPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Producer Choice and the Law of SupplyKEY:Bloom's: ComprehensionMSC: Coursebook366.John advertises his used car for $3,000 in the newspaper. He would be willing to sell his used car for as low as $2,000.He is offered $2,600 for it from a buyer and accepts it. In this trade, John receivesa.producer surplus of $3,000.b.producer surplus of $2,600.c.producer surplus of $600.d.consumer surplus of $400.ANS:CPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:Producer Choice and the Law of SupplyKEY:Bloom's: ApplicationMSC: Coursebook367.Economic efficiency requires thata.individuals take all actions within their power.b.only long-lasting, high-quality products be produced.c.income be distributed equally among individuals.d.all economic activity generating more benefits than costs to individuals in the economy beundertaken.ANS:DPTS:1DIF:ModerateNAT:BUSPROG: AnalyticSTA:DISC: Supply and demandTOP:How Market Prices are Determined: Supply and Demand InteractKEY:Bloom's: ComprehensionMSC: Coursebook Is coffee and Cream complementary?Answer and Explanation: Coffee and cream are complementary(C) goods. Complementary(C) goods: If two goods are consumed at a time simultaneously then both goods are considered as complementary(C) goods.
What will happen to the demand in coffee mate if the price of coffee increases?Tea and coffee are such type of goods. So if price of coffee increases, quantity demanded for coffee will decrease. So the consumers using coffee will now shift themselves to tea unless the price decreases for coffee. So demand for tea is expected to increase now.
Which factor would cause a decrease in the demand for coffee?In the case of coffee, demand might fall as a result of events such as a reduction in population, a reduction in the price of tea, or a change in preferences.
What will be the effect of decrease in price of coffee results in tea if tea and coffee are substitute goods?Since coffee and tea are substitute goods, the decrease in the price of coffee will make it more lucrative for the consumers to buy coffee, such that the consumers will substitute tea for buying more units of coffee. This will reduce the demand for tea, causing the demand curve of tea will shift to the left.
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If coffee and cream are complements a decrease in the price of coffee will cause
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