The accompanying figure shows the annual production possibilities curve for a small country that is open to trade with the rest of the world. Suppose the world price of cashews is $12 per pound, and the world price of mangos is $4 per pound. As indicated in the figure, at these prices, this country will produce 21,000 pounds of mangos and 5,000 pounds of cashews each year.
Suppose that the residents of this country are allergic to cashews and only want to consume mangos. Given that this country is open to trade with the rest of the world, how many mangos in total can its residents consume each year?
A. 30,000 pounds
B. 36,000 pounds
C. 44,000 pounds
D. 39,000 pounds
Answer: B
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If the government set a price ceiling at $8
A. there would be a temporary surplus, then prices would fall to equilibrium.
B. there would be a permanent surplus, at least until the price floor was lifted.
C. the price would fall back to the equilibrium price.
D. the price floor would not have any effect on this market.
Mutual interdependence means that oligopolistic producers rely primarily on price competition in determining their shares of the total market for their products
Indicate whether the statement is true or false.
Assume General Motors has decided to build an assembly plant in St. Louis. The plant will employ 1,000 full-time workers at an annual wage of $40,000 each. If the marginal propensity to consume in St. Louis is 2/3, what change in income will result from operation of the plant for one year?
A. $26.7 million. B. $40 million. C. $80 million. D. $120 million.
When the economy enters a recession, your employer is unlikely to reduce your wages because ________ during a recession
A) output and input prices generally fall B) lower wages increase your incentive to find employment elsewhere. C) output prices always fall D) output prices generally fall and input prices generally rise