Suppose the budget constraint is given by 200P + 50S = 400, where P is pizza and S is spinach. If the prices of S and P increase by 10% each then the budget curve will shift to the
A. left with the same slope.
B. left but the slope will be different than before.
C. right but the slope will be different than before.
D. right with the same slope.
Answer: A
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Demand-pull inflation starts with a shift of the
A) potential GDP line leftward. B) AD curve leftward. C) AS curve leftward. D) AS curve rightward. E) AD curve rightward.
If a Pigovian tax is levied on consumers, the demand curve will shift:
A. straight down, decreasing quantity. B. straight up, decreasing quantity. C. straight up, increasing quantity. D. straight down, increasing quantity.
In a market where there are external or spillover costs associated with consumption and production, the equilibrium will not be efficient because:
A. price will be greater than MC. B. firms will shut down until costs are reduced. C. too many resources will be allocated to production of the good. D. costs of production will, on average, be too high.
Explain whether it is possible for a country to have a comparative advantage in the production of a product without having an absolute advantage in the production of that product
What will be an ideal response?