The law of supply states that an increase in supply is represented graphically as a rightward shift of the supply curve
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose a country has 100 westerners and 100 easterners. A westerner can produce either 6 units of food or 2 units of national defense; an easterner can produce either 2 units of food or 1 unit of national defense
a. Show that easterners have a comparative advantage in the production of defense. b. Suppose this country has decided it wants to produce 60 units of defense. Would the country have more food to consume if the westerners produced these 60 units of defense or if the easterners produced this defense? c. Why should you have anticipated your answer to part (b) of this question? d. Now suppose this country institutes a draft and chooses people for the military randomly. Suppose further that it drafts 20 westerners and 20 easterners (who together will produce 60 units of defense). How much food will the country produce if it chooses to have a military draft? e. Compare the cost in terms of foregone food production under a draft to the cost under a volunteer army where the country pays the easterners enough to persuade them to become soldiers.
England's colonial policy changed dramatically following the French and Indian War. All of the following statements describe factors that contributed to this change in policy except
a. Following the war, property taxes doubled in England in order to finance the large war debt. b. Wealthy New England merchants asked the Crown to exercise more authority over colonial affairs. c. Colonists had actively traded with England's enemies during the war. d. English military leaders realized that a continuing military presence would be necessary to protect colonial borders.
This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.If the players in the figure shown act in their own self-interest, then we know that Dunkin Donuts will earn:
A. -$1 million. B. $0 million. C. -$2 million. D. $2 million.
(Consider This) The story about economist Irving Fisher's conversation with his masseuse illustrates that interest payments arise because of:
A. the possibility of inflation. B. the reality of credit risk. C. imperfect information about the future. D. the time-value of money.