Elena loves orange juice. She reads in the newspaper that 20 percent of the Florida orange crop was destroyed by a late spring frost. Economists predict that the price of oranges will rise by 50 percent by the end of the year. As a result, Elena's demand for orange juice
a. will increase but not until the end of the year.
b. increases today.
c. decreases as she looks for a substitute good.
d. shifts left today.
b
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In the simple Keynesian model, if there is an autonomous investment falls by $20 billion and the MPC (b) is 0.60, the equilibrium income level will increase by
a. $13.3 billion. b. $20 billion. c. $50 billion. d. $100 billion.
Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?
A. $40. B. $45. C. $50. D. $55.
Ceteris paribus, which of the following is most likely to shift both the demand and the supply curves?
A. Technology. B. Expectations. C. Income. D. The price of the good itself.
Using the aggregate demand/aggregate supply model, explain the difference in the employment prospects of the graduates of 2007 and 2009.
What will be an ideal response?