Explain how it would be possible for the equilibrium price and ...

[Ebrown]

Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases.
 
  What will be an ideal response?

Question 2

A nonmonetary opportunity cost is
 
  A) an explicit cost. B) a direct cost. C) an implicit cost. D) an accounting cost.

[kaillie]

Answer to Question 1

An increase in consumer preference will shift the demand curve to the right, which increases the equilibrium price and the equilibrium quantity. A decrease in the number of manufacturers will shift the supply curve to the left, which will increase the equilibrium price and decrease the equilibrium quantity. In both cases, the equilibrium price increases. For the equilibrium quantity to increase, the rightward shift in demand resulting from the increase in consumer preference must be more than the leftward shift in supply which results from the decrease in manufacturers.

Answer to Question 2

C