Why would one expect the AD curve to be vertical?
A. People do not make choices based on relative prices, but instead based on absolute prices.
B. If the price level rises, changes in choices by suppliers are offset by changes in demanders.
C. If the price level rises, relative prices haven't changed so people would not change their choices.
D. Substitution is not one of the reasons why the AD curve has its slope.
Answer: C
You might also like to view...
Refer to Table 2-1. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 50 hot wings would appear
A) along Dina's production possibilities frontier. B) inside Dina's production possibilities frontier. C) outside Dina's production possibilities frontier. D) at the vertical intercept of Dina's production possibilities frontier.
Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
A) a decrease in demand and an increase in supply B) an increase in supply C) an increase in supply and an increase in demand greater than the increase in supply D) a decrease in demand and a decrease in supply