After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,
a. the domestic price of coffee will be greater than the world price of coffee.
b. the domestic price of coffee will be lower than the world price of coffee.
c. the domestic price of coffee will equal the world price of coffee.
d. The world price of coffee does not matter; the domestic price of coffee prevails.
c
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If a product has an elastic demand, it means that consumers are relatively insensitive to a change in the price of the product
a. True b. False Indicate whether the statement is true or false
All else equal, a decrease in the demand for oranges will lead to a(n) ________ in equilibrium price and a(n) ________ in equilibrium quantity.
A. decrease; decrease B. increase; decrease C. decrease; increase D. increase; increase
Exhibit 6-2 Total utility for hamburgers, fries, and Cokes Total Utilityfrom Hamburgers Total Utilityfrom Fries Total Utilityfrom Cokes 1 hamburger (100 utils) 1 order of fries (30 utils) 1 Coke (40 utils) 2 hamburgers (180 utils) 2 orders of fries (50 utils) 2 Cokes (60 utils) 3 hamburgers (240 utils) 3 orders of fries (60 utils) 3 Cokes (70 utils) In Exhibit 6-2, assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost $1 each. Suppose the consumer has $6 to spend on hamburgers, fries, and Cokes. In the consumer equilibrium, what is the marginal utility per dollar for each of the three goods?
A. 20 utils per dollar. B. 40 utils per dollar. C. 90 utils per dollar. D. 270 utils per dollar.
The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates
A. consistently underestimate the actual rate of inflation in the future. B. consistently overestimate the actual rate of inflation in the future. C. are always correct. D. are correct on average, but are subject to errors that are distributed randomly.