A surplus of wheat:
a. is impossible if people are hungry.
b. is impossible if the price of wheat is below equilibrium.
c. will result when the quantity demanded exceeds the quantity supplied at the current price.
d. is unlikely to cause any change in the price of wheat.
e. indicates that the problem of scarcity of wheat has been solved.
b
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Which of the following has been confirmed by empirical tests of the Ricardian model?
A) All predictions of the model for a multi-product, multi-country world are highly unrealistic. B) The existence of nontraded goods results in a high degree of specialization among countries. C) International trade has no impact on income distribution. D) The unimportance of economies of scale as a cause of trade. E) Companies tend to export goods in which they have a relatively high level of productivity.
If supply falls, what happens to equilibrium price and quantity?
What will be an ideal response?