Assume That Both the Demand Curve and the Supply Curve

question 96

Multiple Choice

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result

• A)both the equilibrium price and quantity of MP3 players will decrease.
• B)the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
• C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
• D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

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Definitions:

Parsimony

The principle that among competing hypotheses that predict equally well, the one with the fewest assumptions should be selected.

Propositions

Statements or assertions that express judgments or opinions that can potentially be proven true or false.

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.

Frugality

The quality of being economical with resources or expenditure; practicing restraint in the use of materials and funds.