When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are
A. satisfying the law of supply.
B. substitute goods.
C. inferior goods.
D. complementary goods.
Answer: D
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When the price of a product increases, the passage of time usually causes the price elasticity of demand for the product to become
a. less elastic. b. more elastic. c. smaller and smaller in an absolute value. d. approximately equal to zero in the long run because of scarcity.
Which of the following tax systems is the most fair?
a. proportional taxes b. regressive taxes c. progressive taxes d. There is no objective way to assess fairness among the three systems.
Meredith is looking for work as a computer programmer. Although her prospects are good, she has not yet taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for work than there are openings. Someone waiting in line with her tells her it has been that way for a long time
a. Meredith and Julie are both frictionally unemployed. b. Meredith and Julie are both structurally unemployed. c. Meredith is frictionally unemployed, and Julie is structurally unemployed. d. Meredith is structurally unemployed, and Julie is frictionally unemployed.
The opportunity cost of producing a laptop is lower in Laborland than in Utopia while the opportunity cost of producing wheat is lower in Utopia than in Laborland. However, Laborland can produce more of both the goods
i) Can mutually beneficial trade take place between the two countries? Explain your answer. ii) Which country should specialize in the production of which good?