Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for cookies?
A) The equilibrium price and quantity rise.
B) The equilibrium price rises, and the equilibrium quantity falls.
C) The equilibrium price and quantity fall.
D) The equilibrium price falls, and the equilibrium quantity rises.
Ans: B) The equilibrium price rises, and the equilibrium quantity falls.
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The theory of the relationship between balance of payment and exchange rates that deals with the size of a nation's expenditures is called
A) the absorption approach. B) the elasticities approach. C) the Marshall Lerner condition. D) the exchange rate condition.
To determine whether or not a pair of goods are complements, economists are interested in the cross price elasticity of demand between the two goods
a. True b. False Indicate whether the statement is true or false
All large firms have monopoly power
a. True b. False Indicate whether the statement is true or false
In 2001 the United States and its NATO allies dropped millions of dollars' worth of bombs on Afghanistan. These bombs and the aircraft from which they were dropped
a. were netted out of GDP. b. increased GDP and increased personal welfare. c. decreased GDP and decreased personal welfare. d. were added to GDP.