-Refer to Exhibit 8-2

question 21

Multiple Choice

-Refer to Exhibit 8-2.What word (rises or falls) should go in blank (11) and blank (12) ,respectively,to summarize the resulting impact on short run equilibrium of the given change in the economy?

• A) rises; rises
• B) falls; falls
• C) rises; falls
• D) falls; rises

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Definitions:

Short Run

A period in which at least one input is fixed and cannot be changed by the firm.

Substitutes

Products or services that can replace each other, where an increase in the price of one leads to an increase in demand for the other.

Elastic Demand

Elastic Demand occurs when the quantity demanded of a product changes significantly as its price changes.

Luxury Items

Goods and services that are considered non-essential but desirable, often characterized by their high quality, exclusivity, and high price.