-What Happens as the Result of a Surplus

question 297

Multiple Choice

-What happens as the result of a surplus?

• A) There is downward pressure on prices.
• B) There is upward pressure on prices.
• C) Consumers begin to view the good as an inferior good because it is too commonplace.
• D) Demand for the good increases.

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Definitions:

Unrelated Goods

denotes two or more goods that have no direct connection in consumption or production, implying no cross-price elasticity between them.

Complementary Goods

Products or services that are consumed together because the use of one enhances the use of the other.

Cross-Price Elasticity

A measure of the responsiveness of the demand for one product in relation to a change in the price of another product.

Substitutes

Products or services that can be used in place of each other, fulfilling the same need or purpose.