Starting from an Equilibrium in Both Markets,an Increase in Absorption

question 26

Multiple Choice

Starting from an equilibrium in both markets,an increase in absorption will cause:

• A) the supply curve to shift to the left for both tradables (T) and nontradables (N).
• B) the demand curve to shift to the right for both T and N.
• C) the demand curve to shift to the right for N and to the left for T.
• D) no shift in the curves, but the economy moves to a position of inflation and external surplus.

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Definitions:

Compensatory Decision

A decision-making process where the consumer evaluates the positive and negative attributes of each alternative and makes a trade-off to arrive at a decision.

Unrealistically High

describes a level or amount that exceeds practical possibilities or reasonable expectations, often in context to prices or goals.

Marketers

Professionals responsible for promoting, selling, and distributing a product or service, including market research and advertising to reach potential consumers.

Social Influence

The effect that the words, actions, or mere presence of other people have on an individual’s thoughts, feelings, attitudes, or behaviors.