In moving along a given budget line:
A. the prices of both products and money income are assumed to be constant.
B. each point on the line will be equally satisfactory to consumers.
C. money income varies, but the prices of the two goods are constant.
D. the prices of both products are assumed to vary, but money income is constant.
Answer: A
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If a firm anticipates that it is at a risk of being held up, it is more likely to
a. forgo the transaction completely b. merge with its trading partner c. exchange "hostages" d. All the above
If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to: a. rise and the equilibrium quantity to fall
b. rise and the equilibrium quantity to stay the same. c. rise and the equilibrium quantity to rise. d. stay the same and the equilibrium quantity to fall.
Trade can only benefit a nation if that nation has an absolute advantage in the production of that good
a. True b. False Indicate whether the statement is true or false