How does a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?
What will be an ideal response?
A quota raises the price of the good because it decreases the amount that can be imported. As a result, domestic consumption decreases as domestic consumers decrease the quantity they demand. And, also as a result, domestic production increases as domestic producers increase the quantity they supply.
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The total revenue test says that if a price decrease leads to
A) an increase in total revenue, demand is income elastic. B) a decrease in total revenue, demand is income inelastic. C) a decrease in total revenue, demand is price inelastic. D) a decrease in total revenue, supply is price inelastic. E) a decrease in total revenue, supply is price elastic.
If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,
A. Juan is better off getting up at 8 a.m. B. Juan is better off getting up at 9 a.m. C. Juan’s total utility from sleeping must be negative. D. Juan’s average utility from every hour he sleeps must be negative.
Refer to Figure 16-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the unemployment rate is very low. B) the economy is above full employment. C) firms are operating below capacity. D) income and profits are rising. E) there is pressure on wages and prices to rise.
The exchange rate of Country X is set by government decisions and maintained by government actions. Country X follows a
a. floating exchange rate policy. b. free market exchange rate policy. c. pegged exchange rate policy. d. fixed exchange rate policy.