If Greg Uses a Special Glue to Make Model Planes

question 36

Multiple Choice

If Greg uses a special glue to make model planes that he sells and the price of his model planes increases,then one would expect that the equilibrium price of the special glue would _______ and the equilibrium quantity would _________.

• A) increase;decrease
• B) decrease;increase
• C) increase;increase
• D) decrease;decrease
• E) increase;indeterminant

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Definitions:

Perfectly Competitive

A market structure where there are many sellers and buyers, homogeneous products, and no single buyer or seller can influence prices.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some control over price.

Oligopolistic

Pertaining to a market structure where a small number of firms dominate the industry, leading to limited competition and high barriers to entry.

Decision Variable

A variable that decision makers control in planning and decision-making processes, representing choices available to achieve an objective.