Suppose following the governments incentive program for white wine production, the supply of white wine has increased.
Question:
Suppose following the government’s incentive program for white wine production, the supply of white wine has increased. What will be the effect on the red wine market?
- (a)The price and quantity both increase.
- (b)The price and quantity both decrease.
- (c)The price increases, and quantity decreases.
- (d)The price decreases, the quantity increases.
- Assume the demand for hybrid cars (good A) in the USA was estimated to have the following form:
QDA=1,000,000-20PA+200PB-250PC+0.001I
Where PA, PB, and PC represent the prices of goods A, B, and C respectively; I stands for consumers' income.
Based on the above demand function we can conclude that hybrid cars are:
(a) Normal Goods
(b)Luxury Goods
(c)Inferior Goods
(d)Necessities
Based on the above demand function we can conclude that good A and good C are
(a) Substitutes.
(b) Complements.
(C) Normal goods.
(D) None of the above.
Based on the above demand function good B may represent:
(a) tires.
(b) electric cars.
(c) Restaurant Meals.
(d) The same good as good c.
Please send your working as well so I can understand the answers.
Expert Answer:
d The price decreases the quantity increases The government s incentive program for white wine production will lead to an increase in the supply of wh... View the full answer
