Explain the difference between a change in supply and a change in quantity supplied
What will be an ideal response?
A change in supply is represented by a shift in a supply curve. It can be caused by changes in non-price determinants of supply such as the cost of producing the product or the prices of related products. A change in the quantity supplied is represented by a movement along a supply curve. It is caused by a change in the price of the good itself.
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During October and November 2008, gasoline prices were falling dramatically making travel by car less expensive but air travel prices were as high as ever
If travel by car is less expensive, and income remains the same, describe the substitution and income effects that occur for travelling by car. A) If travelling by car is a normal good, the substitution effect would cause an increase and the income effect would cause a decrease in travelling by car. B) If travelling by car is a normal good, both the substitution and income effects would be cause an increase in travelling by car. C) If travelling by car is a normal good, the substitution effect would cause a decrease and the income effect would cause an increase in travelling by car. D) If travelling by car is a normal good, both the substitution and income effects would cause a decrease in travelling by car.
If the world price for a good is above a nation's pre-trade equilibrium price, then the nation
A) will export the good. B) will import the good. C) will neither export nor import the good. D) cannot gain from trade. E) Both C and D.
The financing of U.S. import transactions, ceteris paribus
A) reduces U.S. interest rates. B) increases the amount of foreign currency held by the Fed. C) increases U.S. GDP. D) decreases the amount of foreign currency held by U.S. banks.
Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at a. prices at and above the equilibrium price
b. prices at and below the equilibrium price. c. prices above and below the equilibrium price, but not at the equilibrium price. d. the equilibrium price but not above or below the equilibrium price.