After the price of Revlon nail polish increased, Jen stopped buying Revlon nail polish and started buying a cheaper brand of nail polish instead. This is called:
A. a decrease in the seller's reservation price.
B. the income effect of a price change.
C. the substitution effect of a price change.
D. a decrease in the buyer's reservation price.
Answer: C
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If supply and demand both decrease, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. lower; lower B. higher; higher C. lower; uncertain D. uncertain; lower
Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 300 lattes were consumed. What might have caused this change?
A) The price of tea (a substitute for cafe lattes) rose. B) The price of tea (a substitute for cafe lattes) fell. C) The price of coffee beans (an input of production of cafe lattes) rose. D) The price of coffee beans (an input of production of cafe lattes) fell.
Suppose the real gross domestic product (GDP) equals $100 billion this year and the nominal gross domestic product (GDP) is $200 billion. This implies that the price level has increased by _____
a. $200 billion b. 50 percent c. $100 billion d. 100 percent e. 200 percent
International trade can make some individuals within a country worse off, even as it makes the country as a whole better off
a. True b. False Indicate whether the statement is true or false