Suppose Indiana and Illinois produce two goods, corn and hogs. Gasoline and sports-utility vehicles are complements. Show the affect on the market for sport-utility vehicles on a supply and demand diagram below. Then note whether the equilibrium price and quantity of sport-utility vehicles will rise or fall. Calculate consumer surplus at the equilibrium price.
Consumers gain and producers lose.
Acme has the following cost function. The T-account of Savers' Bank is given below. Suppose Alan Greenspan would like to increase the money supply. Describe the three things that the Fed can do to accomplish this. Greenspan succeeds in increasing the money supply.