Juan works at Texas Burgers in El Paso and earns $8.00 per hour. His twin brother Felipe works in Mexico Burgers in Ciudad Juarez just across the border and earns $3.00 per hour for exactly the same work. An economist looking at this situation sees:
A. an incentive for Felipe to quit and find another job in Mexico.
B. an incentive for Felipe to cross the border to get a job and thus reduce the gap.
C. evidence that the law of one price has no support in the real world.
D. the tendency of the rich to get richer and the poor to get poorer, widening the gap.
Answer: B
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In calculating price elasticity of demand, which of the following is assumed to be constant?
a. the price of the product itself b. the quantity demanded of the product c. total revenue received from the sale of the product d. the prices of all other products e. none of the above
Deposit insurance is a system in which the government guarantees that:
A. commercial banks will not go bankrupt. B. people can have deposits at commercial banks. C. commercial banks will not lose any deposits. D. depositors will not lose any money even if their bank goes bankrupt.
Refer to the information provided in Figure 33.4 below to answer the question(s) that follow.
Figure 33.4Refer to Figure 33.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, domestic consumption of domestically produced wallets will be ________ wallets and domestic consumption of imported wallets will be ________ wallets.
A. 150; 250 B. 100; 250 C. 200; 50 D. 150; 100
Suppose that a bond having no expiration date has a face value of $10,000 and pays a fixed amount of interest of $1000 annually. Compute and enter in the spaces provided either the effective interest rate which a bond buyer could receive at the new price or the bond price (rounded to the nearest $1000) required to receive the interest rate shown.
