The consumer faces a budget constraint because the market price of X is $3, the market price of Y is $3, and the consumer's budget is $90. In order for this consumer to choose the corner solution at point E, which of the following must occur?
A. price of Y must rise to $6.
B. price of X must rise to $6.
C. price of Y must rise to $9.
D. price of X must rise to $9.
Answer: D
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The above figure shows the U.S. market for 1 carat diamonds. Area C is the
A) decrease in consumer surplus due to the import quota. B) importers' profit from the quota. C) deadweight loss from the import quota. D) increase in producer surplus due to the import quota. E) gain in total surplus due to the import quota.
Foreign exchange market intervention is most effective when:
a. each country's political leaders agree to cooperate fully with the process. b. leading economists in each country believe that intervention is needed. c. permanent differences between the free market exchange rate and the fixed exchange rate are expected. d. temporary differences between the free market exchange rate and the fixed exchange rate are expected. e. all the countries restrict the international movement of goods and services.
When the government wishes to help producers of goods (such as farmers) by establishing the minimum price at which their good can be sold, economists call this a
A. alternative price. B. price statement. C. price ceiling. D. price floor.
A firm's demand curve for investment is its
a. marginal resource cost curve b. marginal product curve c. marginal revenue curve d. marginal rate of return on investment curve e. supply of loanable funds curve