What Is the Effect of a Decrease in the Price

question 10

Multiple Choice

What is the effect of a decrease in the price of potato chips on the market for pretzels,a substitute good,that is initially in equilibrium?

• A)Both equilibrium price and equilibrium quantity of pretzels will increase.
• B)Both equilibrium price and equilibrium quantity of pretzels will fall.
• C)Equilibrium price will increase and equilibrium quantity of pretzels will fall.
• D)Equilibrium price will fall and equilibrium quantity of pretzels will increase.
• E)Equilibrium price and equilibrium quantity of pretzels remain unchanged.

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Definitions:

Purchase Money Securities Interest

A legal claim that allows a lender to have priority in a debtor's asset, provided the loan was used to purchase the asset.

Security

A document or other thing that stands as evidence of title to or interest in the capital, assets, property, profits, earnings, or royalties of any person or company, including any document commonly known as a security.

Chattel Mortgage

A legal arrangement where personal property is used as security for a loan, without the borrower surrendering possession of the property.

Secured Creditor

A lender who is given a specific asset as collateral for a loan, providing them with the right to claim said asset if the borrower defaults.