Suppose the domestic supply (QSU.S.) and demand (QDU.S) for bicycles in the United States is represented by the following set of equations:QSU.S. = 2PQDU.S. = 200 - 2P.Demand (QD) and supply (QS) in the rest of the world is represented by the equations:QS = PQD =160 - P.Quantities are measured in thousands and price, in U.S. dollars.After the opening of free trade between the United States and the rest of the world
A. neither the United States nor the rest of the world gain from trade.
B. both countries gain from trade, but the United States gains more than the rest of the world.
C. the net change in total surplus in the United States is zero, but the rest of the world gains.
D. both countries gain from trade, but the rest of the world gains more than the United States.
Answer: D
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What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market
List prices on new cars do NOT change very often, so
A) the real price of cars is very inflexible. B) the prices of new cars can only be flexible if there are changes in the cost of materials. C) price flexibility is not an important feature in the auto market. D) price flexibility shows up primarily through the negotiations between buyers and sellers.