Macroeconomics
Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 4, Problem 6WNG
To determine

The relative price.

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When Good A and Good B are complements in production and there is a decrease in the price of Good A, what happens in Good B's market?
Goods A and B are substitutes in production. The price of good A rises. As a result, the equilibrium price of good B and the equilibrium quantity. A) rises; decreases B) falls; increases C) falls; decreases D) rises; increases
Consider each of the following goods and services. For each, identify whether the law of one price will hold, and state whether the relative price is greater than, less than, or equal to 1. Explain your answer in terms of the assumptions we make when using the law of one price.   a. Wheat traded freely in the United States and Canada.                   b. Sugar traded in the United States and Mexico; the U.S. government imposes a quota on sugar imports into the United States.                   c. Starbucks grande dark roast coffee sold in the United States and Japan.                   d. Haircuts in the United States and the United Kingdom.
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