Suppose That the Market for Newspaper Is Initially in Equilibrium

question 40

Multiple Choice

Suppose that the market for newspaper is initially in equilibrium. Further suppose that there is both an increase in the price of ink and a decrease in the price of magazines, which people may read in place of a newspaper. Which of the following accurately describes the new equilibrium?

• A)The equilibrium price will rise; the equilibrium quantity is ambiguous.
• B)The equilibrium price is ambiguous; the equilibrium quantity will fall.
• C)The equilibrium price will fall; the equilibrium quantity is ambiguous.
• D)The equilibrium price is ambiguous; the equilibrium quantity will rise.

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Definitions:

Deductive Components

Elements involved in a process of reasoning from general premises to a specific, logical conclusion.

Inductive Generalizations

The logical process of deriving general principles from specific observations or instances.

Deductive

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Analogy

A comparison between two things, typically for the purpose of explanation or clarification, highlighting similarities in some respects.