28 An improvement in production technology will:
A. increase equilibrium price.
B. shift the supply curve to the left.
C. shift the supply curve to the right.
D. shift the demand curve to the left.
29 Suppose the demand for a product is such that the SE of a price change is equal to zero.
A. The product must be an inferior good.
B. The product must be a normal good.
C. There are many substitutes for the product.
D. There are no substitutes for the product.
E. None of the above statements are true.
30 Suppose the demand for a product is such that the SE of a price change is equal to -3. Under which of the following conditions will the law of Demand be violated?
A. The product is a normal good.
B. The product is an inferior good.
C. The IE is > 0.
D. The IE is < 3.
E. None of the above are true
Answer:
28.
An improvement in production technology will:
C. shift the supply curve to the right.
This is because, from theory of supply, we knew that, production technology is a factor of supply curve. And, as there is an improvement in production technology, there will be more supply than before, which results in shift of supply curve to the right.
29.
Suppose the demand for a product is such that the SE of a price change is equal to zero.
D. There are no substitutes for the product.
This is because, when substitution effect (SE) of a price change is equal to zero, that means, a price chagne has no effect on the demand for that good. That means, due to no substitute goods, there is no effect of the price change.