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, consumer surplus equals area(s)
A. A + B + C + D.
B. A + D.
C. A.
D. A + B + C.
Answer: C
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The difference between a free trade area and a customs union is that
a. countries of a free trade area set their own tariff policy with respect to members of the area while countries of a customs union have a uniform tariff policy withrespect to members of the union b. governments receive custom duties (income) from all trade within the customs unioncountries while the governments of a free trade area don't c. free trade area countries engage in reciprocity while countries of a customs unioncan, but need not engage in reciprocity d. countries of a free trade area set their own tariff policy with respect to nonmembersof the area while countries of a customs union have a uniform tariff policy withrespect to nonmembers of the union e. free trade area countries don't share a common border, such as Canada and Mexico,while custom union countries do
Alex wants to maximize his utility. At his current level of consumption, Alex's marginal utility from an additional cup of coffee is 15 utils, and his marginal utility from an additional can of soda is 11 utils. If the price of a cup of coffee is $3 and the price of a can of soda is $2, Alex should:
A. decrease his spending on both coffee and soda. B. reallocate his spending away from soda and towards coffee. C. not change his consumption of either coffee or soda. D. reallocate his spending away from coffee and towards soda.
The C + I + G + Xn for the U.S. curve lies ____________ the C + I + G curve.
Fill in the blank(s) with the appropriate word(s).
A good with an income elasticity of 0.4 is:
A. a normal good. B. a substitute good. C. a luxury good. D. an inferior good.