If the government provides a subsidy to the producers of coffee and simultaneously charges a tax on tea, which of the following can (but not necessarily will) happen in the market for coffee? * The equilibrium price and quantity both decrease. The equilibrium price increases and the equilibrium quantity decreases. The equilibrium price stays the same and equilibrium quantity decreases. The equilibrium price stays the same and equilibrium quantity increases. The equilibrium price decreases and the quantity stays the same.
If the government provides a subsidy to the producers of coffee and simultaneously charges a tax on tea, which of the following can (but not necessarily will) happen in the market for coffee? * The equilibrium price and quantity both decrease. The equilibrium price increases and the equilibrium quantity decreases. The equilibrium price stays the same and equilibrium quantity decreases. The equilibrium price stays the same and equilibrium quantity increases. The equilibrium price decreases and the quantity stays the same.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:If the government provides a subsidy to the producers of coffee and
simultaneously charges a tax on tea, which of the following can (but not
necessarily will) happen in the market for coffee? *
O The equilibrium price and quantity both decrease.
O The equilibrium price increases and the equilibrium quantity decreases.
O The equilibrium price stays the same and equilibrium quantity decreases.
The equilibrium price stays the same and equilibrium quantity increases.
The equilibrium price decreases and the quantity stays the same.
Transcribed Image Text:Income elasticity measures the responsiveness of *
changes in income to changes in price.
changes in quantity demanded to a change in income.
changes in quantity demanded to a change in price.
changes in income to changes in supply.
O All of the above.
Orange juice and apple juice are substitute goods. Assume that many acres of
apple orchards are converted to land for housing development. Which of the
following is most likely to occur in the apple juice and orange markets? *
The demand for apple juice will stay the same and the demand for orange juice will
increase.
The demand for apple juice will decrease and the demand for orange juice will
increase.
O The price of apple juice and orange juice will decrease.
O The supply for apple juice and orange juice will increase.
The supply for apple juice will stay the same, but the supply of orange juice will
decrease.
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