Question

 Which of the following scenarios would definitely cause the price of good or service to decrease? (Check all that apply.)

•  decrease in demand; no change in supply

•  no change in demand; decrease in supply

•  increase in demand; decrease in supply

•  no change in demand; increase in supply 

• increase in demand; no change in supply 

• increase in demand; increase in supply 

• decrease in demand; decrease in supply 

• decrease in demand; increase in supply

Select the best matches from the lists below. 

Answer 1

Answer:

1. increase in demand; decrease in supply

reason: when demand increases, the demand curve shifts to the right and meets the upward sloping supply curve at a point that shows an increase in price. Similarly, when supply decreases, the supply curve shifts to the left and meets the downward sloping demand curve at a point to indicate an increase in price. Thus, both increase in demand and decrease in supply would lead to a double contribution to increase in price

2. a. E=1 ---- unitary price elastic   
b. (Change in p)/(change inQd) ---- slope of a linear demand curve

c. (%change in Qd)/ (%change in P) ---- price elasticity of demand

d. E<1 ---- relatively price elastic

e. (%change in Qs)/ (%change in P) ---- price elasticity of supply

f. E>1 ---- relatively price elastic

reason: the above answers are definitions or formulas of the concepts given above .