"An increase in Mexican income decreases aggregate demand in the United States." Is the preceding statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
The statement is incorrect. An increase in Mexican income means that Mexican citizens buy more goods and services exported from the United States. The increase in U.S. exports increases U.S. aggregate demand.
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As more of a good is consumed, marginal benefit ________ and as more of a good is produced, marginal cost ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases E) does not change; does not change
How does asymmetric information affect market outcomes?
If an economy experiences increasing opportunity costs with respect to two goods, then the production possibilities curve between the two goods will be
A. Bowed outward until the two goods are equal, and then bowed inward. B. Bowed outward or concave from below. C. Bowed inward or convex from below. D. A straight, downward-sloping line.
Suppose an oligopolistic producer assumes its rivals will ignore a price increase but match a price cut. In this case the firm perceives its:
A. demand curve as being of unit elasticity throughout. B. supply curve as kinked, being steeper below the going price than above. C. demand curve as kinked, being steeper below the going price than above. D. demand curve as kinked, being steeper above the going price than below.