Sugarcane can be used to produce both granulated sugar and ethanol. Recent regulations in certain countries now permit a higher amount of ethanol to be added to gasoline. As a result of these changes, an economist would expect granulated sugar prices to ____, and quantity sold to ____.
A. rise; rise.
B. fall; fall.
C. rise; fall.
D. fall; remain the same.
Answer: C
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If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because
A) the tax is handed over to the state directly by buyers. B) sellers do not get to keep the tax revenue. C) the demand for the good has decreased. D) the quantity supplied of the good increases. E) demanders pay none of the tax.
In the figure above, the number of unemployed workers is
A) 4,000. B) 3,000. C) 2,000. D) 5,000. E) zero.
In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would
A) move the point of production along the production possibility curve. B) shift the production possibility curve outward, and increase the production of both goods. C) shift the production possibility curve outward and decrease the production of the labor-intensive product. D) shift the production possibility curve outward and decrease the production of the capital-intensive product. E) shift the possibility curve outward and displace preexisting labor.
Which of the following does NOT shift the IS curve?
A) an increase in autonomous consumption B) an increase in government spending C) a decline in government spending D) a fall in the interest rate