The substitution effect can be defined as:
A. the change in consumption that results from a change in the relative price of goods.
B. the change in income that results from increased effective consumption due to lower prices
C. the change in consumption that results from increased effective wealth due to lower prices.
D. the change in consumption that results from increased effective wealth due to getting a raise.
Answer: A
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A south sea island produces only coconuts. In 2012, the price of a coconut is $1 and the quantity produced is 200. In 2013, the price of a coconut is $1.50 and the quantity produced is 250. 2012 is the base year. Real GDP in 2013 is ________
A) $375 B) $350 C) $200 D) $250 E) $1.50
If a certain type of clothing becomes more fashionable, we would expect that its price
a. will decrease and quantity will remain constant b. and quantity will both decrease c. will increase and quantity will decrease d. will decrease and quantity will increase e. and quantity will both increase
Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of
A) the principle of rival consumption. B) the free-rider problem. C) the negative externality problem. D) the property rights problem.
Refer to the table above. If the word price of trousers is $18 per pair, then which of the following statements is true?
A) All the four countries will export trousers. B) All the four countries will import trousers. C) Country A and Country D will export trousers, whereas Country B and Country C will import trousers. D) Country A and Country D will import trousers, whereas Country B and Country C will export trousers.