Which of the following situations is an example of general equilibrium analysis?
A) An excise tax on cigarettes reduces the supply of cigarettes, leading to higher cigarette prices.
B) A severe frost destroys a significant portion of the coffee crop, leading to higher coffee prices. The higher coffee prices increase the demand for tea, resulting in higher tea prices. The higher tea prices in turn cause the demand for coffee to rise even more, further increasing the price of coffee.
C) A decrease in the demand for peanuts causes both the equilibrium price and quantity of peanuts to decrease. As a result, peanut farmers reduce their peanut output and supply decreases.
D) As fuel costs rise, airlines' costs of production rise. Higher production costs drive profits down, leading to higher air fares and fewer flights.
Correct Answer:
Verified
Q4: Use the following to answer question:
Table 15.1
Q6: Goods X and Y are substitute goods.
Q8: The market for soybeans is characterized by
Q8: Which of the following is an example
Q9: Farmers can use their land to grow
Q11: Which of the following statements is (are)
Q12: How has the oral birth control pill
Q20: Consider a society with three people whose
Q29: In a country with 100 people, each
Q30: What are the general equilibrium effects between
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents