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Section A: Multiple Choice Questions Q1
Section A: Multiple Choice Questions Q1. Which of the following reflects an economic insight? a. Trade is a zero-sum game, where some win and some must lose b. Investments lead to increased profits but also to lower wages c. Chinese investments in Australia benefit only the Chinese d. Chinese investments in Australia increase the wages, profits and welfare receipts of Australians as well as the profits of the Chinese investors Q2. If demand is perfectly inelastic, a rise in price: a. Has no effect on the quantity demanded b. Has a modest effect on the quantity demanded c. Has a large effect on the quantity demanded d. Shifts the demand curve to the right
Expert Solution
1) Answer is D.
Investment increases profit, wages and welfare in both the countries. Investment increases the welfare ij both the countries.
Trade is not a zero sum game, trade is a positive sum game.
2) Answer is A.
Perfectly Inelastic demand means there will no effect of price on quantity demanded. Perfectly inelastic demand curve is vertical line on horizontal line.
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