Refer to Edgeworth Box Economy. Based on the situation shown in the diagram, we can conclude that
The accompanying diagram shows an Edgeworth box economy. The initial endowment is point O. At current relative prices, Augie chooses point X and Bev chooses point Y.
a. Augie and Bev have reached a competitive equilibrium.
b. the relative price of food must rise to clear the market.
c. both point X and point Y must lie on the contract curve.
d. there is a shortage of clothing and a surplus of food.
b. the relative price of food must rise to clear the market.
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A command system is a method of organizing production that
A) uses a market-like mechanism inside the firm. B) relies on competitive markets. C) uses a managerial hierarchy. D) uses incentives most extensively.
Between the U.S. and Nepal, Nepal invests less in new factories and equipment. This will likely cause
A. the U.S.'s production possibilities frontier to shift outward faster than Nepal's. B. Nepal's production possibilities frontier to shift inward faster than the U.S.'s. C. the U.S.'s production possibilities frontier to shift inward faster than Nepal's. D. Nepal's production possibilities frontier to shift outward faster than the U.S.'s.
Suppose the market clearing price for gasoline is $2.5 per gallon. Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $2.3 per gallon. Such a situation is an example of
A. a price floor that will lead to a surplus of gasoline on the market. B. a price ceiling that will lead to a shortage of gasoline on the market. C. a price floor that will lead to a shortage of gasoline on the market. D. a price control that will lead to a surplus of gasoline on the market.
Which of the following is an example of a productivity shock?
A) The introduction of new management techniques B) A change in taxes on corporate profits C) A change in the level of government transfer programs D) An increase in the money supply