Holding all else constant, an increase in the preferences of Americans for Mexican goods will ________ the supply of dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. decrease; decrease
B. decrease; increase
C. increase; increase
D. increase; decrease
Answer: D
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When a positive externality exists, the market is said to fail because it overproduces the good associated with the positive externality.
Answer the following statement true (T) or false (F)
If the cheeseburger costs $2, how many cheeseburgers would you buy
a. 1 b. 2 c. 3 d. 4
Economic theory indicates that as a larger share of medical services are paid for by a third party (for example, insurance companies or the government) rather than directly by the consumer,
a. consumers will have a stronger incentive to economize. b. consumers will have a weaker incentive to economize and the prices of medical services will rise more rapidly than would otherwise be the case. c. consumers will have a weaker incentive to economize, but medical service suppliers will have a stronger incentive to keep prices low. d. the suppliers of medical services will have more incentive to economize.
The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese
a. True b. False Indicate whether the statement is true or false