Refer to the accompanying figure. Suppose the solid line shows the current demand curve for coffee. In response to an announcement that much of next year's coffee crop has been destroyed by a storm in Brazil, you should expect:
A. an increase in the quantity of coffee demanded, but no shift in the demand curve.
B. neither a change in quantity demanded nor a shift in demand because next year's coffee crop will not affect the current demand for coffee.
C. the demand curve to shift to D(A) in anticipation of higher future prices.
D. the demand curve to shift to D(B) in anticipation of higher future prices.
Answer: D
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If M = $100, Y = $500 and P = $2, then V is equal to
A) 0.10 B) 1. C) 10. D) 50.
The theory of comparative advantage suggests that nations should produce a good if they:
a. have the lowest opportunity cost. b. have the lowest wages. c. have the most resources. d. can produce more of the good than any other nation.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
What MIGHT be the purpose of government regulation of natural monopolies, or economies of scale?
A) Government regulation might be used to facilitate competition. B) Government regulation might be designed to put a firm out of business. C) Government regulation might be intended to raise prices on all consumers. D) Government regulation might be created for less oversight of a profitable business.