Summarize how the law of supply explains the effects of price on the quantity supplied
What will be an ideal response?
According to the law of supply, producers offer more of a good or service as its price increases and less as its price falls. Economists use the term quantity supplied to describe how much of a good or service a producer is willing and able to sell at a specific price.
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If a government limits interest rates to a level below equilibrium, how do savers and investors respond? How is the discrepancy resolved?
What will be an ideal response?
What is the "right" degree of abstraction necessary to analyze an economic problem?
a. simple abstraction of only minor details b. simple abstraction of only irrelevant details c. total abstraction of all variables d. total abstraction of all irrelevant details e. There is no "right" degree of abstraction to analyze an economic problem.
The exchange rate of the dollar relative to other currencies is determined by market forces. When equilibrium is present in the exchange rate market,
A) the purchases of Americans from foreigners will be equal to the sales of Americans to foreigners. B) imports from foreigners will create jobs in other countries but employment in the United States will decline by an equal amount. C) the gains of Americans from international trade will be just equal to the gains of foreigners from the trade. D) Americans will gain from the international trade only if foreigners lose an equal amount.
All of the following are assumptions of the production possibilities curve EXCEPT
A) resources are fully employed. B) there is a fixed time period. C) there is a fixed level of technology. D) there is a fixed demand for the products.