Draw the supply curve for a good whose price elasticity of supply is equal to zero. Be sure to label both axes.
What will be an ideal response?
The supply curve in the graph is a vertical line, indicating that the quantity of the good supplied will not change no matter what happens to its price. In terms of the calculation of the price elasticity of supply, the change in quantity is zero and so therefore is the calculated value of the price elasticity.
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If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account, by how will M1 and M2 change?
A) M1 will decrease, but M2 will remain the same. B) M1 will increase, and M2 will increase. C) M2 will decrease by $100. D) Both M1 and M2 will remain the same. E) M1 will remain the same, and M2 will increase.
The gravity model suggests that over time
A) trade between neighboring countries will increase. B) trade between all countries will increase. C) world trade will eventually be swallowed by a black hole. D) trade between Earth and other planets will become important. E) the value of trade between two countries will be proportional to the product of the two countries' GDP.
According to the purchasing power parity theory, a rise in the United States price level of 5 percent, and a rise in the Mexican price level of 6 percent cause
A) the dollar to appreciate 1 percent relative to the peso. B) the dollar to depreciate 1 percent relative to the peso. C) the dollar to depreciate 5 percent relative to the peso. D) the dollar to appreciate 5 percent relative to the peso.
Value added is the
A. Increase in market value of a product that takes place at each stage of the production process. B. Impact on third parties caused by market activities. C. Difference between nominal GDP and real GDP. D. Addition to GDP because nonmarket activities are captured.