In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil
What will be an ideal response?
An increase in the money price of a key resource such as oil squeezes firms' profits and decreases aggregate supply. As illustrated in the figure above, the AS curve shifts leftward, in the figure from AS1 to AS2.
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The marketing people at Ben and Jerry's Ice Cream Company believe that if they lower the price of their Cherry Garcia flavor ice cream by 25 percent, the quantity demanded will increase by 5 percent. If they are correct in their belief, then
A) the demand for Cherry Garcia is price elastic. B) their total revenue from Cherry Garcia will increase if they lower the price. C) the demand for Cherry Garcia is income elastic. D) their total revenue from Cherry Garcia will decrease if they lower the price.
What would be the price of a perpetuity bond that has a $100 interest payment and a 4% yield?
a) $1,000 b) $2,000 c) $2,500 d) $4,000