Suppose that the equilibrium price of T-shirts increases and the equilibrium quantity of T-shirts decreases. This is best explained by:
A. an increase in the demand for T-shirts.
B. an increase in the supply of T-shirts.
C. a decrease in the demand for T-shirts.
D. a decrease in the supply of T-shirts.
Answer: D
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Suppose the typical consumer only purchases food and clothing, and her utility can be expressed as U = F ? C. Currently, food costs $5 per unit and clothing costs $2 per unit. Her income is $70
If the price of food increases to $6, compare the resulting Laspeyres price index with a true cost of living index.
At the core of the American trade problem is that
A. Americans spend too much on consumption. B. the dollar is too low. C. the Japanese are excluding American products by means of high protective tariffs. D. American manufacturers are too quality conscious and should instead concentrate on reducing costs.
Figure 9.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that 50% of used cameras in the market are lemons (low quality), how many lemons (low quality) will be supplied by sellers?
A. 10 B. 15 C. 20 D. 25
When real Gross Domestic Product (GDP) rises, which of the following will automatically occur?
A. an increase in unemployment compensation expenditures B. an increase in income tax revenues C. a dcrease in government expenditures D. an increase in income tax rates