A change in economic output is potentially efficient
A. only if no one is made worse off.
B. if the value of the resulting gains exceeds the value of the resulting losses.
C. if the value of the resulting gains exactly equals the value of the resulting losses.
D. if the value of the resulting gains is less than the value of the resulting losses.
Answer: B
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Which of the following variables is the key determinant in deciding whether goods are to be bought domestically or imported?
A) The real exchange rate B) The domestic interest rate C) The nominal exchange rate D) The foreign interest rate
Suppose an increase in supply lowers the price from $10 to $8 and increases the quantity demanded from 100 units to 130 units. Using the midpoint method, the elasticity of demand equals
A) 1.17. B) 0.85. C) 0.26. D) 1.56. E) None of the above answers is correct.