Assume the demand function for good X can be written as Qd = 80 - 3Px - 6Py + 10I, where Px = the price of X, Py is the price of Y and I is consumer income. If the price of Y decreases by 5 dollars, what would the reduction in Px have to be in order to keep the quantity demanded of Xunchanged by the change in the price of Y?
A) decreased by 10 dollars
B) decreased by 5 dollars
C) decreased by 2.5 dollars
D) decreased by 1 dollar
Ans: A) decreased by 10 dollars
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Suppose a society begins by producing 3 units of X and 4 units of Y and then alters production to 4 units of X and 4 units of Y. If the quantity and quality of resources and the technology being used remain unchanged, then:
a. 3 units of X and 4 units of Y are a combination best represented by a point inside the production possibilities curve [PPC]. b. we can conclude that the society has moved along the PPC. c. we can conclude that resources were being fully utilized at 3 units of X and 4 units of Y. d. we can conclude that resources were being efficiently utilized at 3 units of X and 4 units of Y. e. 3 units of X and 4 units of Y are a combination best represented by a point outside the PPC.
When tariffs are imposed, the losers include
A. Domestic consumers and foreign producers. B. Domestic consumers and domestic producers of import-competing goods. C. Domestic consumers and the domestic government. D. Foreign consumers and domestic producers of import-competing goods.
A shortage occurs when there is an excess supply in a market.
Answer the following statement true (T) or false (F)
Assume that at the beginning of 2012, one dollar could be traded for 5 yuan. If in 2013 one dollar was being traded for 6 yuan, it can be concluded that:
A) the dollar appreciated against the yuan and the yuan depreciated against the dollar in 2013. B) the real exchange rate changed in 2013 assuming PPP holds. C) the nominal exchange rate did not change in 2013. D) the dollar depreciated against the yuan and the yuan appreciated against the dollar in 2013.