The total value of commodity A produced in Country X increased from $500,000 in
ID: 1226228 • Letter: T
Question
The total value of commodity A produced in Country X increased from $500,000 in 2011 to $700,000 in 2012. According to Laura, a student of economics, the share of commodity A in real GDP of 2012 should be higher than that of 2011. Which of the following, if true, would strengthen Laura's argument?
A. it assumes that firm F does not export good X.
B. it assumes that the price of X will not increase in the near future.
C. it assumes that firm F does not export good X.
D. it assumes that firm F is the only producer of good X.
E. it assumes that the supply curve of X will shift to the right in response to the increased demand.
Explanation / Answer
The total value of commodity A produced in Country X increased from $500,000 in 2011 to $700,000 in 2012. According to Laura, a student of economics, the share of commodity A in real GDP of 2012 should be higher than that of 2011. it assumes that the supply curve of X will shift to the right in response to the increased demand, would strengthen Laura's argument. This is because if the supply curve of X will shift to the right in response to the increased demand, then there is more goods produced in the economy which is in equilibrium and as a result total value increases.
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