If air travel and bus travel are substitutes,
a. an increase in the price of bus travel will decrease the demand for air travel.
b. a decrease in the price of bus travel will decrease the demand for air travel.
c. an increase in the price of bus travel will generally have no effect on the demand for air travel.
d. an increase in the price of bus travel will shift the demand curve for air travel to the left.
B
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Refer to Figure 13-4. Should the firm represented in the diagram continue to stay in business despite its losses?
A) No, it is not able to cover its fixed cost. B) Yes, it should increase its revenue by raising its price. C) Yes, its total revenue covers its variable cost. D) No, it should shut down.
If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 20 rand/US$, then
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. D) there is no arbitrage opportunity.