Refer to Figure 1A.1. Assume that the graph in this figure represents the demand and supply curves for used cars, which are inferior goods. An increase in income would be represented by a shift from
A) Demand 1 to Demand 2.
B) Demand 2 to Demand 1.
C) Supply 1 to Supply 2.
D) Supply 2 to Supply 1.
B
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With an increase in the demand for a good, if prices are not allowed to increase:
A) social surplus will be maintained at maximum. B) there will be no incentive for firms to increase the quantity supplied of the good. C) a surplus will occur in the market. D) there will be an increase in overall efficiency in the market.
Macroeconomic equilibrium occurs when:
a. Expected supply equals expected demand. b. Expected leakages equal actual injections. c. Actual leakages equal expected injections. d. Actual supply equals actual demand and actual leakages equal actual injections. e. Expected amount supplied equals expected amount demanded, which means expected leakages equal expected injections.
If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia
a. should import coffee. b. has a comparative advantage in coffee and should export coffee. c. should produce just enough coffee to satisfy domestic demand. d. should produce no coffee domestically.
Consider two straight-line PPFs. They have the same vertical intercept, but curve I is flatter than curve II. The opportunity cost of producing the good on the vertical axis
What will be an ideal response?