Assume that sofas and armchairs arc substitute goods. The graph shown above Illu

Question

Assume that sofas and armchairs arc substitute goods. The graph shown above Illustrates the demand curve for sofas. Which of the following events could have triggered the shift In demand from D1 to D2. as shown above? The price of sofas increased. The price of armchairs Increased. The price of labor for making sofas increased. The price of sofas decreased. The price of armchairs decreased. Which of the following statements is true? Markets respond to both effective and latent demand. Markets respond to demand, even if that demand is not backed up by cash. Markets respond only to wants or needs that arc backed up by the ability to pay. Demand curves represent "effective demand" only. Both c and d are true. A bike shop in a small town has received a shipment of 10 new bicycles. The shop offers the bikes for sale at a price of S300 each. At this price, however, there are only two people in town who are willing to buy a bicycle. This situation can be described as disequilibrium shortage surplus equilibrium both a and c are correct Questions 15 to 17 refer to the following graph. When the price of cars is $5000, which of the following terms is not an accurate description of the situation? Quantity demanded exceeds quantity supplied. A shortage exists. The market is in disequilibrium. Fewer than five cars arc available for sale. The market is in equilibrium.

Explanation / Answer

12
I think I remember the graph from the previous post that this question refers to, if D2 is higher than D1, this is an increase in demand in which case the shift in demand is caused by b) an increase in the price of armchairs. If D2 was lower, than it is caused by a decrease in the price of armchairs E. (remember that a SHIFT in the demand curve -a new demand curve- is caused by a change in the determinants of demand OTHER than the goods price, so in this case it would be a change in the price of substitutes, armchairs)

13. E
14. E
15. E

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