Fake a lst-Hannah Harcden Google Chome EcoN 414 Managerial Economics Test: Final

Question

Fake a lst-Hannah Harcden Google Chome EcoN 414 Managerial Economics Test: Final Exam Time Remaining: 02.05.21 This Test: 37 This Question: 1 pt 10 of 37 (4 complete Siuppose the maket espesiences the tollowing shock A decrease in the price of a subsande good label thies ) Use he point drawing foof to indicate the now equlbrlium price and quantity Carelelly fudow he instrucfions above, and only draw eguind ocs Click the graph, choose a tool in the palette and follow the instructions to create your graph NS HO DEL BACK SPACE ERT Y

Explanation / Answer

A decrease in the price of a substitute good will mean that the demand for this good will fall. This will cause the demand curve to shift leftwards and this causes a fall in price and quantity.

Here we simply equate the MRTS with MPL/MPK. Then given the values we get the MPL as -12. The correct answer is thus A.

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