PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will
a. increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.
b. increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
c. decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
d. decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.
b
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The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place
a. True b. False Indicate whether the statement is true or false
A policy that raises taxes or reduces government spending is called:
A. a contractionary monetary policy. B. a contractionary fiscal policy. C. an expansionary monetary policy. D. an expansionary fiscal policy.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.
The demand for cars in a certain country is given by: D = 20,000 - P, where P is the price of a car. Supply by domestic car producers is: S = 5,000 + 0.5P. If this economy opens to trade while the world price of a car is $6,000, and the government imposes a quota allowing 3000 cars to be imported, then domestic equilibrium quantity of cars will be ________.
A. 8,000 B. 12,000 C. 6,000 D. 10,000