Refer to the information provided in Figure 12.4 below to answer the question(s) that follow.
Figure 12.4There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S0 and D0.Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, a new general equilibrium will eventually be reached in sector Y with a price of ________ and a quantity of ________.
A. P1; Q0
B. P1; Q1
C. P0; Q0
D. P0; < Q1
Answer: D
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If a society produces at a point on the production possibilities frontier, this is consistent with the full employment of resources.
Answer the following statement true (T) or false (F)
Which of the following will tend to cause an increase in technology?
A) increases in human capital B) an increase in research and development expenditures C) the development of new ideas D) all of the above
In the economic way of thinking, countries are poor because they lack
A) money. B) access to the New York Stock Exchange. C) foreign aid. D) productive knowledge and ideas. E) effective minimum wage legislation.
If a price ceiling of $8 were placed in the market in the graph shown:
A. some surplus is transferred from consumer to producer.
B. some surplus is transferred from producer to consumer.
C. all consumers are made better off.
D. all producers are made better off.
AACSB: Knowledge Application