Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a:
A. move from a to b on D 1 .
B. shift from D 2 to D 3 assuming the output effect exceeds the substitution effect.
C. shift from D 3 to D 2 assuming the output effect exceeds the substitution effect.
D. move from b to a on D 1
B. shift from D 2 to D 3 assuming the output effect exceeds the substitution effect.
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The demand function for tickets to Ireland is expressed as Qd = 1600 - 0
005P + 2 PEngland + 3rain + 2Y, where P is the price for tickets to Ireland, PEngland is the price of tickets to England, rain is the inches of rain Ireland receives annually, and Y is annual household income. Assuming PEngland is $1000, rain is 30 inches per year, and income is 40,000, how much would the price of tickets to Ireland have to fall for consumers to be willing to buy one more trip per year? A) $15 B) $20 C) $50 D) $200
One reason the Fed tolerates ongoing inflation is because it
a. believes that the CPI understates the actual inflation rate b. believes that the CPI overstates the actual inflation rate c. accepts the idea that a zero inflation rate would make labor markets work more smoothly d. wants to focus more on price stability than on full employment e. is uncertain about the long-run stability of the Phillips curve