Two factors are affecting the domestic auto industry: (1) an increase in cheap Korean imports (2) an increase in the cost of materials. What can we say about equilibrium price and quantity of domestic autos?
A. Equilibrium price will fall.
B. Equilibrium quantity will fall.
C. Equilibrium price will rise.
D. The answer cannot be determined from the information given above.
Answer: B
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One unit of labor in Antardia can produce either 18 pounds of oranges or 9 pounds of apples in a month, while one unit of labor in Vanadia can produce either 16 pounds of oranges or 4 pounds of apples in a month. The opportunity costs of producing 1 pound of orange for one unit of labor in Antardia and Vanadia are: a. 0.25 pounds of apples and 0.5 pounds of apples, respectively. b. 9 pounds of
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