The figure above gives your budget line for magazine and CDs per month. Given that your income equals $60 per month, what is your real income in terms of CDs?
A) 3 CDs
B) 5 CDs
C) 6 CDs
D) $60/month
C
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The more broadly a good is defined,
a. the more substitutes it has so the more elastic is its demand b. the fewer substitutes it has so the more elastic is its demand c. the more substitutes it has so the less elastic is its demand d. the fewer substitutes it has so the less elastic is its demand e. the more complements it has so the more elastic is its demand
Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure to the right shows the impact of this tariff. With the tariff in place, the United States produces
A. 25 million pounds of rice B. 10 million pounds of rice C. 31 million pounds of rice D. 15 million pounds of rice
(Consider This) Some economists believe that modest inflation, say 2-3 percent, might help reduce unemployment during recessions. What is the argument of economists who reject this idea?
A. Consumers would stop buying goods at higher prices, reducing demand, output, and employment. B. Firms will pocket the profits resulting from higher prices and have no incentive to expand output and employment. C. Wages and other costs would rise with the inflation, keeping firms from expanding employment. D. Consumer spending would shift to cheaper imported goods, reducing domestic demand and employment.
Answer the following statements true (T) or false (F)
1. The ability to produce a good or service at a lower opportunity cost than other producers face is known as comparative advantage. 2. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates. 3. One cause for the uneven standard of living throughout the world is the uneven distribution of resources. 4. The application of the principle of comparative advantage requires each of two trading partners to have an absolute advantage over the other in the production of some particular commodity.