"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for
apples to shift to the right." Which of the following correctly comments on this statement?
A) The statement will be true if consumer tastes for apples and oranges do not change.
B) The statement is false because a change in the price of apples would not change the demand for apples.
C) The statement is false because oranges are inferior goods; apples are normal goods.
D) The statement is false because one cannot assume that apples and oranges are substitutes for all consumers.
Answer: B
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Everything else being the same, if the interest rate in the United States increases, then in the foreign exchange market the
A) demand for U.S. dollars will remain unchanged. B) demand for U.S. dollars will increase. C) demand for U.S. dollars will decrease. D) supply of U.S. dollars will increase.
The saying “the lower the price, the better” may not always be correct for an economy’s public interest because
A. people should have to pay for what they want. B. people will overuse something they perceive as being cheaper than the utility they receive for it. C. the government can no longer afford to provide all the goods and services it provides because it is slowly going broke. D. cheaper prices will make people buy less of other things.
Kelly is an attorney and also an excellent typist. She can type 120 words per minute, but she is pressed for time because she has all the legal work she can handle at $75 per hour. Kelly's friend Todd works as a waiter and would like some typing work (provided that he can make at least his wage as a waiter, which is $25 per hour). Todd can only type 60 words per minute. a. Kelly should do all
the typing because she is faster. b. Todd should do the typing as long as his earnings are more than $25 and less than $37.50 per hour. c. Unless Todd can match Kelly's typing speed, he should remain a waiter. d. Todd should do the typing, and Kelly should pay him $20 per hour.
Which of the following also occurs as the production possibilities curve shifts outward?
A. GDP per capita remains constant. B. The unemployment rate rises. C. Long-run aggregate supply increases. D. Output decrease.