Question

which of the following events would result in a lower price in the market for bicycles?

a) Demand for bicycles and supply bicycles both decreases.

b) Demand for bicycles increase and supply of bicycles decreases.

c) Demand for bicycles and supply bicycles both increases.

d) Demand for bicycles decreases and supply bicycles increases.

why answer D. Please explain in detail.  

which of the following would cause the demand for a frozen pizza to increase?

a. A decrease in the price of frozen pizza.

B. A decrease in the price of soda, a complementary good.

C. An increase in income assuming frozen pizza is an inferior good

D. a reduction in the price of mozzarella cheese.

Answer 1

1. Which of the following events would result in a lower price in the market for bicycles?

Option (a) is not true because if supply decreases more than demand, then the price can actually rise instead of falling

Option (b) is not true because a rise in demand and fall in supply will necessarily cause the price of bicycle to rise

Option (c) is not true because if demand increases more than supply, the price can actually rise

Option (d) is true because decrease in demand and increase in supply will both cause the price to fall due to excess supply situation

2. Which of the following would cause the demand for a frozen pizza to increase?

Option (a) is not true because if frozen pizza is a giffen good, as it's price will fall, quantity demanded will also fall

Option (b) is true because if price of soda will decrease, people will consume more of soda with frozen pizza as well. Hence, the demand for frozen pizza will rise

Option (c) is not true because frozen pizza is an inferior good; so as income increases, consumer will substitute it for more expensive and healthy food

Option (d) is not true because mozzarella cheese is an input to frozen pizza. As cost of frozen pizza will fall, the supply will increase causing a fall in it's price. Once again, if it is a giffen good, the demand will actually decrease instead of increasing