Consider a Situation of Two Cities Linked by a Government-Subsidized

question 38

Multiple Choice

Consider a situation of two cities linked by a government-subsidized railway that effectively makes transportation free.In one city,there is high demand for fish and chips.In another city,fish and chips is considered unfashionable and is rarely eaten.Regardless of the difference in demand,the price for fish and chips is the same in both cities.This can be explained by what concept?

• A) exchange rate manipulation
• B) identical supply
• C) the law of one price
• D) variable inflation
• E) fixed exchange rates

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Definitions:

Task

A defined piece of work or activity assigned to someone as part of a job or course of study.

Performance

The act or process of carrying out an action or accomplishing a task or function.

Objective Standards

Unbiased and universally accepted criteria or measures used to evaluate or judge something.

Self-perception Theory

A psychological theory proposing that individuals infer their own attitudes and emotions by observing their behavior and the context in which it occurs.