If, due to rising demand, the price of cotton rose 15 percent while the prices of other goods and services rose an average of 10 percent,
a. the relative price of cotton has risen and one would expect the output of cotton to rise as a result.
b. the relative price of cotton has risen and one would expect the output of cotton to fall as a result.
c. the relative price of cotton has fallen and one would expect the output of cotton to rise as a result.
d. the relative price of cotton has fallen and one would expect the output of cotton to fall as a result.
a
You might also like to view...
Which of the following events would reduce the size of the "real-world" money multiplier?
a. Banks hold more excess reserves. b. Households hold less currency. c. The Fed increases the discount rate. d. The Fed reduces the required reserve ratio.
Price elasticity of demand tends to be larger in the long run than in the short run. Which of the following is consistent with the reason why?
a. Because people see fewer and fewer substitutes for the good in the long run. b. Because if price rises, over time producers will be able to offer more substitutes. c. Because over time the good will become a smaller and smaller share of peoples' budget. d. Because over time people's incomes rise.