Suppose It Becomes a Common Belief Among Consumers That the Current

question 99

Multiple Choice

Suppose it becomes a common belief among consumers that the current cotton crop falls because of a drought, the price of cotton clothing will rise greatly next year. Then in the current market for cotton clothing, the

• A)equilibrium price will fall and the equilibrium quantity will rise.
• B)equilibrium price and equilibrium quantity will increase as demand increases.
• C)equilibrium price and equilibrium quantity will decrease as demand increases.
• D)demand for cotton clothing will decrease as consumers search for alternatives.
• E)equilibrium price will rise and the equilibrium quantity will fall.

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Definitions:

Ultimate

Representing the final or most significant version of something, or the fundamental principles underlying a concept.

Arousal Theory

A theory in psychology that suggests individuals are motivated to engage in behaviors that help them maintain an optimal level of physiological arousal.

Optimal Level

The most favorable or efficient level of functioning, performance, or operation.

Drive Theory

A theory suggesting that behavior is motivated by the need to reduce internal tension caused by unmet biological needs.