Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, the net loss of consumer surplus equals area(s)
A. A + B + C.
B. B + C.
C. A + B + C + D.
D. A.
Answer: B
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In a circular flow diagram,
i. the value of production = income. ii. the value of production = expenditure. iii. expenditure = income. A) i and ii are true statements. B) i and iii are true statements. C) Only iii is a true statement. D) Only i is a true statement. E) i, ii and iii are true statements.
Ramen noodles are a staple food item for many college students. Ramen noodles are very inexpensive, easy to prepare, and can be combined easily with other foods. After students graduate, find employment, and earn a higher income, they decrease their Ramen noodle purchases significantly. In this case, Ramen noodles are
A) a normal good. B) an inferior good. C) a complement for higher income people. D) a substitute good. E) None of the above answers is correct.
If Joe receives an increase in his wage rate and decides to decrease his hours worked, the
A) substitution effect and the income effect must be equal. B) substitution effect must exceed the income effect. C) income effect must exceed the substitution effect. D) substitution effect must be zero.
Writing during the Great Depression, Keynes naturally focused on problems of
a. hyperinflation. b. budget deficits. c. trade deficits. d. unemployment.