In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X. Refer to the given information. An increase in the price of a product that is a complement to X will:
A. decrease S, decrease P, and decrease Q.
B. decrease D, decrease P, and decrease Q.
C. increase D, increase P, and increase Q.
D. increase D, increase P, and decrease Q.
Answer: B
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Suppose the yen value of a $100,000 wheat import contract rises from ¥12,000,000 to ¥13,000,000 between the contract and the payment date. This implies that the yen value of 1 dollar has declined so that, other things equal, we can expect an increase in Japanese demand for U.S. goods
a. True b. False Indicate whether the statement is true or false
A country that does not engage in international trade is likely to face a problem because: a. some industries are too small to be efficient if restricted to their domestic markets alone. b. it cannot produce along its production possibilities frontier
c. domestic producers face a fluctuating demand for their products. d. it cannot consume at a point below its production possibilities frontier.