The war in Iraq comes to an end. Iran and Afghanistan lay pipes to generate more oil. The United States and Venezuela enter into an era of friendship. Which of the following correctly captures the effect of this change on the market for gasoline?
A. Both equilibrium quantity and price will increase.
B. Both equilibrium quantity and price will decrease.
C. Equilibrium quantity will decrease, but equilibrium price will increase.
D. Equilibrium quantity will increase, but equilibrium price will decrease.
Answer: D
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Refer to Table 2-20. What is Thailand's opportunity cost of producing one wristwatch?
A) 0.05 pounds of rice B) 20 pounds of rice C) 25 pounds of rice D) 60 pounds of rice
The compensation variation and equivalent variation will be closer to each other when
A) the income elasticity is greater. B) the budget share is greater. C) the price change is smaller. D) the income elasticity is smaller.
Legislation that provides a subsidies for tobacco growers is an example of
a. public-interest legislation b. competing-interest legislation c. a positive-sum game d. special-interest legislation e. concentrated-costs legislation
Which of the following will increase aggregate demand in the United States?
A. a higher price level B. an increase in the real interest rate C. an increase in wealth due to a substantial appreciation in the value of stocks D. a decrease in real income in Japan and Western Europe