A person's sensitivity to a price change for a good, such as breakfast cereal, depends on all of the following except the
a. price of the good
b. cost of producing the good
c. person's income
d. availability and closeness of substitutes
e. time the person has to adjust to the price change
B
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To answer the next question, use the following graph showing the domestic demand and supply curves for a specific standardized product in a particular nation.
If the world price for this product is $0.50, this nation will experience a domestic
A. shortage of 160 units, which it will meet with 160 units of imports. B. surplus of 160 units, which it will export. C. shortage of 160 units, which will increase the domestic price to $1.60. D. surplus of 160 units, which will reduce the world price to $1.00.
The formula for total fixed cost is
A) TFC = TVC - TC. B) TFC = TC - TVC. C) TFC = TC/TVC. D) TFC = TC + TVC.
According to the classical theory, an inward shift in aggregate demand would reduce
A) real Gross Domestic Product (GDP) and the price level. B) the price level but have no effect on real Gross Domestic Product (GDP). C) real income but have no impact on the price Gross Domestic Product (GDP). D) the price level but increase real Gross Domestic Product (GDP).
Suppose that the dollar real exchange rate falls by 10% against the euro, 20% against the pound, and 25% against the yen. If the United States trades equally with each country, what is the percentage decline in the real effective exchange rate?
a. 22.5% b. 18.3% c. 15.1% d. 20.3%