Refer to the graph below showing the market for a product. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2?
A. Because after the shift in the demand, there would be a surplus at price P2
B. Because after the shift in the demand, there would be a shortage at price P2
C. Because after the shift in the demand, there would be a shortage at price P1
D. Because after the shift in the demand, there would be a surplus at price P1
C. Because after the shift in the demand, there would be a shortage at price P1
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Last year, an economy produced 2400 bananas, 3000 satsumas and 2500 peaches. The price of bananas was €0.50, the price of satsumas was €0.60 and the price of peaches was €0.50. Nominal GDP was:
(a) € 5200. (b) € 6600. (c) € 4250. (d) Cannot be computed.
If the absolute price elasticity of demand for a product is greater than 1, then
A. the absolute price elasticity of demand is inelastic and consumers are relatively sensitive to price changes. B. the absolute price elasticity of demand is inelastic and consumers are relatively insensitive to price changes. C. the absolute price elasticity of demand is elastic and consumers are relatively insensitive to price changes. D. the absolute price elasticity of demand is elastic and consumers are relatively sensitive to price changes.