If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices.
B. lower level of output and prices.
C. higher level of output and prices.
D. lower level of output at higher prices.
Answer: A
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In purchasing diamonds and water, a consumer would maximize utility by
a. dividing expenditure equally between those two goods b. equating the marginal utilities from each of those two goods c. equating average utility per diamond with average utility per unit of water d. equating the total utility per diamond with the total utility per unit of water e. equating marginal utility per dollar spent on each of those two goods
An export subsidy can be good for a country if
A. the international market for the export product is highly competitive. B. the subsidy is offset by a countervailing duty. C. the subsidy decreases the export price so the export quantity increases. D. the subsidy allows the country's only exporting firm to capture the entire world market.
If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will
A. fall. B. rise. C. exceed the price in foreign countries. D. be below the price in foreign countries. E. One cannot predict the impact on the price of the commodity.
Bonds represent:
A. a claim on company dividends. B. ownership of a company. C. all financial assets guaranteed to pay interest. D. loans to governments and corporations.