9. Four students from your economics class are sitting in a local restaurant discussing the market for coffee. Below are quotes from each of the four students. All of the following quotes are logically correct except one. Which quote indicates incorrect economic analysis?
A. Kendra: "If the price of caffeinated soft drinks such as Mountain Dew went down, then consumer demand for coffee would go down since they're substitutes for each other."
B. Nicholas: "If Brazil is hit hard by such a severe freeze that half of its crop is wiped out, then the price of coffee will probably rise."
C. Sergei: "If the demand for coffee were to increase, then I would expect the price to rise, which would then cause the demand to fall back down to its original level."
D. Tasha: "If coffee drinkers expect the price of coffee to
2006-09-09 20:37:21 · 6 answers · asked by Anonymous in Science & Mathematics ➔ Mathematics
Tasha: "If coffee drinkers expect the price of coffee to rise next month, then current demand will go up and lead to a price increase this month."
2006-09-09 20:38:11 · update #1
Everyone thinks its A or D. However, I belive its C because the price goes doesnt mean that demand will fall. What if the cause of demand was from technology or income rose? Which would ppl not care if price rose.
2006-09-09 20:51:15 · update #2
The answer is A
let's analyze...
there is a law in aconomics which is called the law of supply and demand
the law says...
If the supply for a certain product goes up, the prices would go up and the demand would go down. If the supply would go down, the prices would go down and the demand would go up...
by just concentrating on the relationship between price and demand... we are assured that statement A is incorrect... why? because the price of mountain dew went down thus the demand for mountain dew SHOULD go up and the demand for coffee SHOULD go down since a lot of people would like to buy mountain dew instead of coffee since it's a lot cheaper now...
for the explaination of the rest just contact me!!!
2006-09-09 20:39:26 · answer #1 · answered by Hi-kun 2 · 0⤊ 2⤋
I think D is the correct answer.
A is a correct statement because if the price of a product goes down, the demand for that product rises and the substitute product would then drop with the decrease in price. A is a correct statement.
D is the answer
2006-09-10 03:46:00 · answer #2 · answered by gatorgrad99_99 3 · 0⤊ 0⤋
A. is incorrect The demand for caffeinated soft drinks and coffee are independent with respect to price. The faulty assumption is that the two forms of delivering caffeine are equivalent.
2006-09-10 03:47:07 · answer #3 · answered by Helmut 7 · 0⤊ 0⤋
I don't think it's C, b/c in an efficient market, this is a correct statement. A is a true statement if the price of coffee is stable. B is def a true statement. I think D by default
2006-09-11 18:26:08 · answer #4 · answered by Byron W 3 · 0⤊ 0⤋
A is false.
D is iffy - it depends on unstated assumptions.
2006-09-10 03:43:47 · answer #5 · answered by nickipettis 7 · 0⤊ 1⤋
The answer is "D-Tasha's statement"
2006-09-10 03:43:12 · answer #6 · answered by Best Answer Expert 3 · 0⤊ 1⤋