Question

Q1. Two goods are . if an increase in the price of one causes a fall in demand for the other.

A. Substitutes
B. Complementary
C. Geffen

Q2. If the consumer thinks that (x1,x2) is at least as good as (y₁ , y₂ ) and that (y₁ , y₂ ) is at least as good as (x1,x2), then the consumer must be between the two bundles of goods.
A. Weakly preferred
B. indifferent
C. strongly preferred

Q3. If the economy sours and people worry about their future job security, demand for new autos may now.
A. Fall
B. Rise
C. not change

Q4. Economists use the supply and demand model to analyze
A. competitive markets
B. imperfect market
C. monopolistic market

Q5. The fall in revenue from lower quantity is smaller than the increase in revenue from higher , so revenue rises.
A. Price
B. Income
C. production

Q6. For many goods, price elasticity of is greater in the long run than in the short run, because firms can build new factories, or new firms may be able to enter the market.
A. Demand
B. Supply
C. Income

Answer 1

Two goods are Complementary if a price increase in one leads to a demand decrease in the other. Consumers are indifferent when they value two good bundles the same. Demand for new autos likely falls when the economy sours, and economists use supply and demand models for competitive markets.

Step-by-step explanation:

Q1. Complementary goods are those where an increase in the price of one leads to a fall in demand for the other, like golf balls and golf clubs.

Q2. When a consumer views two bundles of goods (x1, x2) and (y1, y2) as equally satisfactory, they are said to be indifferent between the two.

Q3. If the economy sours and job security concerns rise, demand for expensive items like new autos may fall as consumers become cautious in their spending.

Q4. Economists use the supply and demand model primarily to analyze competitive markets, where many buyers and sellers interact.

Q5. When the price of a good increases, if the fall in revenue from lower quantity is smaller than the increase in revenue from the higher price, overall revenue rises.

Q6. The supply elasticity may be greater in the long run compared to the short run, as firms have more time to adjust their production capacity.