14. Pizza is a normal good. When the price of a pizza decreases from $12 to $10, A) the income effect means people buy less pizza. B) the income effect means people buy more pizza. C) the quantity demanded of pizza will not change. D) None of the above answers is correct. 15. The ABC Music club charges a price of $16 for a CD and $8 for a cassette. Both CDs and cassettes are normal goods. If the ABC Music club increases the price of a CD to $18, everything else remaining the same, A) the substitution effect induces club members to buy more cassettes and fewer CDs. B) the income effect induces club members to buy fewer CDs. C) the substitution effect induces club members te buy more CDs and fewer cassettes. D) Both answers A and B are correct. 16. When supply and demand both increase, the A) quantity definitely decreases. B) quantity definitely increases. C) price definitely increases. D) price definitely decreases.

14. Pizza is a normal good. When the price of a pizza decreases from $12 to $10, A) the income effect means people buy less pizza. B) the income effect means people buy more pizza. C) the quantity demanded of pizza will not change. D) None of the above answers is correct. 15. The ABC Music club charges a price of $16 for a CD and $8 for a cassette. Both CDs and cassettes are normal goods. If the ABC Music club increases the price of a CD to $18, everything else remaining the same, A) the substitution effect induces club members to buy more cassettes and fewer CDs. B) the income effect induces club members to buy fewer CDs. C) the substitution effect induces club members te buy more CDs and fewer cassettes. D) Both answers A and B are correct. 16. When supply and demand both increase, the A) quantity definitely decreases. B) quantity definitely increases. C) price definitely increases. D) price definitely decreases.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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