Suppose Iceland goes from being an isolated country to being an importer of coats. As a result,
a. consumer surplus increases for consumers of coats in Iceland.
b. producer surplus increases for producers of coats in Iceland.
c. total surplus remains unchanged in the coat market in Iceland.
d. it is reasonable to infer that Iceland has a comparative advantage over other countries in coat production.
a
You might also like to view...
Graphically illustrate the effects of an increase in autonomous consumption on the demand line (ZZ) and Y. Clearly indicate in your graph the initial and final equilibrium levels of output. Briefly explain why this increase in output is greater than (in absolute terms) the initial change in autonomous consumption
What will be an ideal response?
Economists have argued that rent control is "the best way to destroy a city, other than bombing." Why would economists say this?
a. They anticipate that low rents will cause low-income people to move into the city, reducing the quality of life for other people. b. They anticipate that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. c. They anticipate that rent controls will cause a construction boom, which will make the city crowded and more polluted. d. They anticipate that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.