Two Types of Used Fender Stratocaster Guitars Are Available for Sale

question 16

Multiple Choice

Two types of used Fender Stratocaster guitars are available for sale: those made in the U.S.and those made in Mexico.It is impossible for the buyer to know which is which,but the seller knows.The value of a U.S.Stratocaster is $900 and the value of a Mexican Stratocaster is $400.The U.S.Stratocasters are 30% of Fender's production and the Mexican Stratocasters are 70% of production.No seller must sell a guitar for less than the guitar's value.
-Refer to the information above.As time goes on,buyers' reservation prices will __________ and __________ U.S.-made Stratocasters will be offered for sale.

• A) rise;more
• B) fall;more
• C) rise;fewer
• D) fall;fewer
• E) fall;the same number of

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Definitions:

Monetary Policy

Actions by a central bank or other regulatory authority to influence a nation's money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Fiscal Policy

Government policies related to taxation and public spending with the aim of influencing economic conditions, including growth, inflation, and unemployment rates.

Legislation

Laws and statutes that are enacted by a legislative body through its legislative process.

Marginal Propensity

The portion of additional income that an individual spends on consuming goods and services, as opposed to saving.