Demand for Snickers bars will decrease if:
A. the price of Snickers bars decreases.
B. a news story claiming 95% of all geniuses eat at least one Snickers bar a day is released.
C. the price of Milky Way bars (a substitute) decreases.
D. the price of Milky Way bars (a substitute) increases.
C. the price of Milky Way bars (a substitute) decreases.
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Using the HO model, assume that the United States is capital abundant and Mexico is labor abundant. If soybeans are capital intensive and avocados are labor intensive,
A) Mexico will produce more soybeans once trade is introduced. B) the United States will produce more avocados once trade is introduced. C) avocado prices in the United States will fall once trade begins. D) soybean prices in Mexico will rise once trade begins.
Suppose a firm in each of the two markets listed below were to increase its price by 15 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales, but the firm in the second market listed would not?
a. cotton and soybeans b. gasoline and corn c. #2 lead pencils and college textbooks d. electricity and cable television