1109 0 nublackboardcom TMobile LTE QUESTION X and Y are subs

11:09 0 nu.blackboard.com .T-Mobile LTE QUESTION X and Y are substitute goods. X is put on salle: buy one, get one free. This will lead to 4.decreased demand for beth Xand Y X is an inferior good if O its quantity demanded goes up when its price goes down O2 its quantity demanded goes up when income of the consumer goes up 3. its quantity demanded goes down when income of the consumer goes up O4 its quantity demanded goes down when its price goes down QUESTION Suppose the price of X is fixed below equilibrium price. This will lead to O2encess demand of 2 points Which of the following is an example of positive externality? O2.atancy etaurant in San Deg Which of the following will not change a demand curve? 2 points Which of the following would increase GDP? O1 You buy 100 shares of Wal-Mart stock. 2 Your car is destroyed by a fire, and you purchase a two-year-old car to replace it. O3 Your car is damaged by a fire, and you hire a mechanic to repair it. O4 Your car is damaged by a fire and you reduce then number of hours work to repair the car yourse

Solution

Given the fact that X and Y are substitute goods if good X is put on sale then clearly its demand rises and demand for good Y decreases.

Thus if good X is put on sale it would 2) lead to a decrease in demand of good Y.

2) An inferrior good is the one whose quantity demanded decreases with a rise in income of the consumer.In other words the income elasticity of demand for the good is negative.That is the answer is 3) the quantity of good decreases as the income of the consumer increases.

3)If price of good X is fixed below equilibrium price this would lead to an excess demand situation i.e people would demand more at a lower price while the suppliers would supply less at a lower than equilibrium prices.Thus the market would be characterised by excess demand or shortage of good.

4) Best example of a positive externality is given by the subsized lunch in public schools of San diego.This is because by giving subsidized food yields positive benefits which otherwise would not have realised.For example this would indirectly result in poor students becoming regular in public schools which would the literacy level in the country.

5) The demand curve is not affected by TECHNOLOGY .Technology affects only the supply side of the market , thus a change in technology shifts the supply curve and not the demand curve.