In the market for domestic avocados, what would happen to the market clearing price and the equilibrium quantity if there was a drought in avocado growing areas?
A) The market clearing price would rise, and the equilibrium quantity would rise.
B) The market clearing price would fall, and the equilibrium quantity would rise.
C) The market clearing price would rise, and the equilibrium quantity would fall.
D) The market clearing price would fall, and the equilibrium quantity would fall.
Answer: C
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Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does not change the oil himself?
A) Tiger Woods has an absolute advantage in changing oil. B) Tiger Woods has a comparative advantage in changing oil. C) There is no opportunity cost for the garage mechanic to change oil. D) The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic.
After World War II, which of the following about the value of homes is not true?
A. On average they did not fall for 60 years. B. They were unaffected by recessions until the 2000s. C. They seemed immune to the business cycle. D. It remained relatively unaffected by inflation.
Which of the following lists two things that both increase the money supply?
a. make open market purchases and raise the reserve requirement ratio b. make open market purchases and lower the reserve requirement ratio c. make open market sales and raise the reserve requirement ratio d. make open market sales and lower the reserve requirement ratio
The tendency of changes in asset prices to affect spending on consumption goods is called the ________ effect.
A. multiplier B. wealth C. income D. substitution