Author Question: Refer to Table 2-9. What is Japan's opportunity cost of producing one wristwatch? A) 0.04 pounds ... (Read 91 times)

MGLQZ · **on:** Jun 29, 2018

Refer to Table 2-9. What is Japan's opportunity cost of producing one wristwatch?

A) 0.04 pounds of rice B) 4 pounds of rice C) 25 pounds of rice D) 40 pounds of rice

Question 2

What is meant by holding all else equal? How is this concept used when discussing movements along the demand curve? How is this concept used when discussing movements along the supply curve?

What will be an ideal response?

anyusername12131 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

Holding all else equal means that everything other than the variable in question is assumed to remain constant. When we move along a demand curve we are assuming that all of the determinants of the demand for a good other than the price of the good (e.g., income, the prices of other goods) remain constant. When we move along a supply curve we are assuming that all of the determinants of the supply of a good other than the price of the good (e.g., wage rates, the price of raw material, technology) remain constant.