Refer to the figure. If price falls from $60 to $40, total revenue goes ________, so demand is ________.
Fill in the blank(s) with the appropriate word(s).
Answer: up by $120; elastic
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Fiscal policy is determined by
A) Congress and the Federal Reserve. B) Congress and the president. C) the president and the Federal Reserve. D) the Federal Reserve.
Which of the following describes two-part tariff pricing?
A) A firm charges two different prices for the same good. B) An importer has to pay a tax at the nation's borders, and a sales tax when the good is sold. C) A buyer must pay a down payment and monthly payments to buy big-ticket items such as a car, a plasma television, or a suite of furniture. D) A buyer pays an initial price for entrance to the market and an additional fee for each unit of the product purchased.
Given the input-output relationships in the table below:
Countries A B Goods X 8 4 Y 4 1 (a) Which country has absolute advantage in which good and why? (b) Which country has comparative advantage in which good and why? (c) If A is endowed with 8000 hours of labor, how much X will it produce after trade begins? How much Y? Explain. (d) What is the allowable range on A's wages relative to B's if trade is flowing between these two countries according to comparative advantage?