D Question 3 0.5 pts Suppose pasta salad is a normal good. If the price of pasta
ID: 1138555 • Letter: D
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D Question 3 0.5 pts Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) decreases and income increases, the O equilibrium quantity and equilibrium price of pasta salad will both decrease. equilibrium quantity of pasta salad will increase and the equilibrium price of pasta salad may either increase or decrease. o O equilibrium quantity and equilibrium price of pasta salad will increase. O the effect on both the equilibrium quantity and price of pasta salad is ambiguous (i.e. cannot be determined based on the information provided). equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase e D | Question 4 0.5 pts As the owner of a hotel, you have decided to lower the price for all rooms in the month of October. What should you expect to happen? O As the price is lowered the quantity demanded of rooms will not change. O As the price is lowered, the quantity demanded of rooms will decrease. O As the price is lowered, the demand for rooms will decrease. ® As the price is lowered, the quantity demanded of rooms will increase. O As the price is lowered, demand for rooms will increase.Explanation / Answer
a) a decrease in the price of pasta will increase the demand and an increase in the income will again increase the demand. But with an increase in the demand, the price will increase and the quantity supplied will be higher.
the answer is "B".
b) "D"
At a lower price, the quantity demanded will increase in the market.
c) "B"
New demand will decrease the quantity supplied and it will increase the price.
d) "Decrease, be ambiguous" it will decrease the price of the goods and quantity supplied will be ambiguous in the market.
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