1. Select the scenarios that result in lower prices if they were to occur in isolation?
a. Higher technology, fall in the price of a substitute, decrease in the price of a complement
b. Higher productivity, lower taxes on corporations, lower expected future prices
c. Higher income for inferior goods, higher subsidies for firms, increase in tastes and preferences
d. Lower costs of production; fall in the price of substitute, reduction in consumer subsidies
2. If the price of substitute increased the result would be __________ prices, and we would say__________
a. an increase in prices, quantity demanded increased
b. an increase in prices, demand increased
c. a decrease in prices, demand decreased
d. a decrease in prices, supply increased
3. Consumers can make costly mistakes when not enough information is available. Which of the following represents a market solution to obtaining costly information?
a. Franchises
b. Advertising
c. Third party verification
d. All of the above