In 1990 the UN placed trade sanctions on Iraqi oil. In 1996, Iraq was allowed limited export of oil to make war reparations. What was the predicted effect of the two events on equilibrium price and quantity of oil?
A. The price rose initially, then fell (failing to regain its former losses); quantity rose, then fell
B. The price fell initially, then rose (failing to return to its former low level); quantity fell and then rose
C. The price rose initially, then fell (failing to regain its former losses); quantity fell and then rose
D. The price fell initially, then rose (failing to return to its former low level); quantity rose and then fell
Answer: C
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The table above shows Tom's total utility from milkshakes and sodas. Tom's total budget for milkshakes and sodas is $20.00 per week. Milkshakes cost $2.00 each and sodas cost $1.00 each
What quantity of sodas does Tom purchase at his consumer equilibrium? A) five B) six C) seven D) eight
The most important determinant of the price elasticity of demand for a good is
A) the share of the good in the consumer's budget. B) whether the good is a necessity or a luxury. C) the definition of the market for a good. D) the availability of substitutes for the good.