Agraria specializes in the production of cotton. However, cotton manufacturers in Agraria are expecting the demand for its exports to fall sharply due to growing competition from a neighboring country
Assuming all else equal, which of the following is likely to happen in this case?
A) The equilibrium unemployment in Agraria will fall.
B) The equilibrium real wage in Agraria will rise.
C) Investment expenditure in Agraria will rise.
D) Consumption expenditure in Agraria will fall.
D
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The income elasticity of demand is a measure of
A) how demand for a product changes when the price of a substitute or complement product changes. B) how responsive consumers are to changes in the price of a product. C) how responsive suppliers are to changes in the price of a product. D) the extent to which the demand for a good changes when income changes. E) the extent to which the supply of a good changes when the demand changes as a result of a change in income.
A proposed project should be accepted if the net present value is
A) positive. B) negative. C) larger than the internal rate of return. D) smaller than the internal rate of return.