Trade makes some people absolutely better off and others absolutely worse off in each of the trading countries. However, the gainers and losers in the short run are somewhat different from those in the long run, because more adjustment can occur in the long run.
Answer the following statement true (T) or false (F)
True
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Which of the following is an example of consumer surplus?
A) Jose buys a hamburger for $2 and tells you he would not have paid a penny more. B) John believes the price he paid for his computer was too high. C) Mary buys a paper tablet for $2 and finds the same good at another store for $1.50. D) Sue would have paid $15 for a new compact disc but paid only $10. E) Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600.
The government decided to reduce taxes on fast-food to increase revenue. The government assumes that fast-food products have
a. An inelastic demand b. An elastic demand c. A demand curve that is upward sloping d. Unitary elastic demand curve
Suppose that the United States does 1/2 of its trade with Canada, 1/4 with the United Kingdom, and 1/4 with Mexico. If the dollar real exchange rate rises by 10°/o with Canada, rises by 20% for the United Kingdom, and falls by 10% for Mexico, what is the percentage change in the real effective exchange rate?
a. 11.5% b. 10% c. 7.5% d. -2.5%
If AVC is $10 when P = MC, a firm
A) will have positive economic profits if price is greater than $10. B) is producing too little output. C) should shut down if price is less than $10. D) is experiencing economies of scale.