QUESTION 18 If buyers and seller both expect lower prices for a good, then the e
ID: 1138475 • Letter: Q
Question
QUESTION 18 If buyers and seller both expect lower prices for a good, then the equilibrium quantity will: A. rise. O B. fall. . C.remain the same. D. change in an unpredictable manner QUESTION 19 If buyers and sellers both expect higher prices in the future, this will result in: O A. an increase in the equilibrium price and quantity B. a decrease in the equilibrium price and quantity. O C. an increase in the equilibrium price and a decrease in the the equilibrium quantity. OD. a decrease in the equilibrium price and an increase in the equilibrium quantity OE. a higher price, but the effect on equilibrium quantity is indeterminate QUESTION 20 If the price of a cassette recorder is $36 and the price of a home computer is $1,800, then the relative price of a home computer is A..02 cassette recorder B. 50 cassette recorders OC..02 home computer. D. 50 home computers. O E. $1,800.Explanation / Answer
Answer
Q18
The buyer expectation of lower prices decreases the demand now and shifts the demand curve to left which decreases quantity and price in equilibrium
The seller expectation of lower price increases the supply now which decreases price and increases quantity in the equilibrium so in total the price falls and quantity effect is unknown
Option B
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Q19
The buyer expectation of increase in prices increases the demand now and shifts the demand curve to right which increases quantity and price in equilibrium
The seller expectation of the increase in price decreases the supply now which decreases the quantity and increases price in the equilibrium so in total the price rise and quantity effect is unknown
Option E
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Q20
Relative price of a good x=quantity purchase of good y/quantity purchased of good x
in $1800 50 cassette recorder purchased and 1 home computer
so the relative price=50/1=50 cassette recorder
Option D