An increase in the price of one good can cause the demand for another good to increase if the goods are substitutes.
Answer the following statement true (T) or false (F)
True
If the price of a good increases, consumers will respond by buying more of the relatively cheaper alternative (substitute).
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The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?
A) less than $27 per game B) $27 per game C) more than $27 per game. D) More information is needed to determine if the price is more than, less than, or equal to $27 per game.
How are Treasury bond prices affected when the interest rate rises?
a. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. b. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must increase. c. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. d. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must increase.