An increase in supply, holding demand constant, will cause:
a. Higher prices and a larger quantity sold
b. Lower prices and a larger quantity sold
c. Higher prices and a smaller quantity sold
d. Lower prices and a smaller quantity sold
b. Lower prices and a larger quantity sold
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In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
Suppose that a toxic waste spill renders half of the land in New Jersey uninhabitable. Assuming that land and labor are complements in the production function, what would happen to the wages earned by workers and rents earned by landowners?
a. Both wages and rents would increase. b. Both wages and rents would decrease. c. Wages would increase, and rents would decrease. d. Wages would decrease, and rents would increase.
If two goods are complements,
A. cross price elasticity of demand will be negative. B. the demands for both goods will be elastic. C. cross price elasticity of demand will be 0. D. cross price elasticity of demand will be positive.
Income elasticity of demand reflects
A. the responsiveness of demand to changes in income. B. the responsiveness of income of producers to a change in quantity sold of the good. C. the responsiveness of the quantity demanded to changes in income, adjusting its relative price so real income does not change. D. the change in total quantity demanded divided by the total change in income.