Draw a graph to illustrate the effect of higher gasoline prices on the demand for large SUVs. What is the relationship between gasoline and SUVs?
What will be an ideal response?
Gasoline and SUVs are complements. When the price of gasoline rises it becomes more expensive to drive an SUV, and so the demand for SUVs is likely to decrease (people may switch to smaller, more fuel-efficient vehicles). Note that as a result of the decrease in demand for SUVs their price should decrease and so should the quantity of SUVs sold.
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Refer to Table 2-2. Assume Nadia's Neckware only produces ascots and bowties. A combination of 24 ascots and 12 bowties would appear
A) along Nadia's production possibilities frontier. B) inside Nadia's production possibilities frontier. C) outside Nadia's production possibilities frontier. D) at the horizontal intercept of Nadia's production possibilities frontier.
Restaurant meals are an example of a ________ good and clothing is an example of a ________ good. The pattern of interregional trade is determined primarily by ________
A) nontraded; traded; external economies. B) traded; nontraded; internal economies C) nondurable; durable; natural resource D) durable; nondurable; natural resources E) consumer; style; population