If there is an increase in the price of broccoli because of disastrous weather that destroys about half of this year's spinach crop, which of the following could be TRUE?
A) The cross elasticity of demand between spinach and broccoli is negative 1.25.
B) The demand curve for broccoli has shifted rightward and the cross elasticity of demand between spinach and broccoli is positive.
C) The demand curve for spinach has shifted to the leftward and the cross elasticity of demand between spinach and broccoli is positive.
D) The demand curves for spinach and broccoli have become more cross inelastic.
B
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Lolita wants to purchase a rather bland-looking shopping center built in the 1970s, tear it down, and construct an architecturally-stimulating office building that will confer $750,000 of benefits to society. In its current state, the shopping center is worth $900,000. Lolita goes to the city council with her proposal and tells the council members that the new office building will beautify the city and increase property-tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will
A) be made richer since property-tax revenues will increase. B) be made richer since the area will be more aesthetically beautiful. C) be made poorer since the project confers benefits that are lower than the current value of the shopping center. D) not be affected since the project only encompasses one small parcel of land.
The U.S. dollar appreciates against the euro. What is the impact on aggregate expenditures and income?
A) Both increase. B) Both decrease. C) Aggregate expenditure increases and income decreases. D) Aggregate expenditure decreases and income increases.