Why would you expect the demand for diamond jewelry to fall faster than plastic, costume jewelry when all incomes fall?
What will be an ideal response?
The income elasticities differ for the two goods. Diamond jewelry most likely has a larger income elasticity than costume jewelry.
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To calculate the multilateral effective exchange rate for a nation for each trading partner:
a. add the share of trade to the % change in the exchange rate and add the sums. b. divide the share of trade by the % change in the exchange rate and add the dividends. c. subtract the share of trade from the % change in the exchange rate and add the differences. d. multiply the share of trade by the change in the exchange rate and add the products
Under a production quota policy, the government can maintain a particular support price by reducing the quantity supplied. To maintain a particular support price, how must the quota amount change if the demand curve becomes more elastic?
A) Quota amount increases B) Quota amount decreases C) Quota amount does not change D) Quota amount depends on the supply curve