Suppose the U.S. economy enters a recession and incomes fall. What will happen to the equilibrium prices and quantities of normal goods? Would your answer be the same if you were discussing inferior goods? Why or why not?
What will be an ideal response?
If incomes fall, the demand for normal goods will fall as well. This means that the demand curve will shift to the left, lowering both the equilibrium price and equilibrium quantity. The answer would be opposite if we were discussing inferior goods. A decrease in income raises the demand for inferior goods, leading to a higher equilibrium price and quantity.
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If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, then ________
A) the real interest rate will rise B) firms will decrease their investment demand C) people will save more D) the real interest rate will fall
There is a growing market for buying and selling information about the online behavior of consumers. Most people use one of only a small number of search engines (such as Google, Bing, or Yahoo!) when surfing the net
It has been hard for new search engines to gain any market share. The market for search is best considered as A) perfectly competitive. B) oligopoly. C) monopolistically competitive. D) monopoly.