Which of these statements best represents the law of demand?

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Name: ID: B 17. Which of these statements best represents the law of demand? a. When income levels increase, b. When buyers demands buyers respond by purchasing more of most goods. c. When for a good increase, the price of the good will increase. the d. When price of a good buyers respond by purchasing more of the good. for a good increase, they purchase more of the good. Figure 4.7 $40 25 20 15 100 200 300 400 500 600 700 800 18. Refer to Figure 4-7. At a price of $35, a. a surplus would exist and the price would tend to rise from s35 to a higher price. b. shortage would exist and the price would tend to fall from $35 to a lower price. c. an excess demand would exist and the price would tend to fall from $35 to a lower price d. a surplus would exist and the price would tend to fall from $35 to a lower price. 19. would to the price and quantity of peanut butter the price of peanuts went up, the butter, and health officials good) fell, fewer firms decided to produce peanut price of jelly (a complementa announced that eating peanut butter was good for you? a. Price will fall and the effect on quantity is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous d. The effect on both price and quantity is ambiguous.

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Answer

Ans)

17.

c.When the price of a good falls, buyers responnd by purchasing
more of that good.

The law of demand states that an increase in the price of a
good, ceteris paribus leads to a fall in the fall in the demand for
that good and vice-versa.

18.

d. a surplus would exist and the price would tend to fall from
$35 to a lower price.

At P=$35 demand is 200 whereas supply is 600.Thus, there is a
surplus of 400.This exerts downward pressure on prices until the
equilibrium price of 25 is acheived.

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19.

d.The effect on both price and quantity is ambigous.

Price of peanut butter went up-decrease in demand
price of jelly fell-increase in demand
fewer firms supply=fall in supply
health offical statement-increase in demand

Net effect =ambigous


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