The Price of a New Textbook Increases from $75 to $90

question 131

Multiple Choice

The price of a new textbook increases from $75 to $90 while the price of used copies of the textbook increases from $50 to $65. Other things equal, we would expect to observe

• A) the quantity demanded of the used textbook to increase while the quantity demanded of the new textbook to fall.
• B) the quantity demanded of both to fall.
• C) the demand for the new textbook to increase while the demand for the used textbook to decrease.
• D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

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Definitions:

Exports

Domestically produced goods and services sold in other countries.

Comparative Advantage

A theory in economics that suggests a country should specialize in producing and exporting goods in which it has a lower opportunity cost than its trading partners.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors when using the same amount of resources.

Skilled Human Resources

Individuals within the workforce who possess specialized training, knowledge, and experience in particular fields or disciplines.