Assume that pencils and pens are substitutes. If the price of pencils rises ceteris paribus, then we will see
A. A decrease in the demand for pens.
B. A decrease in the supply of pens.
C. An increase in the demand for pens.
D. An increase in the supply of pens.
Answer: C
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Consider a graph illustrating the upward sloping supply curve for coffee. What would you expect to happen if the government decided to levy a 75-cents per gallon subsidy on coffee?
a. There would be a movement up along the supply curve. b. There would be a movement down along the supply curve. c. The supply curve would shift to the left. d. The supply curve would shift to the right. e. None of the above.
The Federal Reserve decides to lower the discount rate. The resulting economic change will be represented by a(n): a. upward movement along the short-run Phillips curve. b. downward movement along the short-run Phillips curve. c. rightward shift of the short-run Phillips curve
d. leftward shift of the short-run Phillips curve.