In the market for a normal good, what is the ultimate market reaction of suppliers to an increase in the incomes of consumers?
A) Suppliers do not react, because a change in income shifts the demand curve, not the supply curve.
B) The supply curve shifts to the right.
C) The supply curve shifts to the left.
D) Quantity supplied increases as the equilibrium moves along the supply curve due to a rise in the demand.
D
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Suppose the supply of bicycles is price elastic. This means that
A) consumers will respond significantly to an increase in the quantity of bicycles supplied. B) suppliers will respond significantly to changes in the price of bicycles. C) suppliers face many substitutes for bicycles. D) suppliers will increase the quantity of bicycles supplied, but not immediately.
Refer to the above figure. Which panel represents a monopolistic competitor that is earning zero economic profits?
A) Panel A B) Panel B C) Panel C D) Panel D