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Q11) PED = 0 means it's perfectly in-elastic. Imposing a tariff would increase the overall cost to the consumer but there would be no change in the quantity demanded. Therefore C is the answer.
Q19) Find out the Opportunity cost ratios.
M
1X = 0.5Y
1Y = 2X Comparative advantage in Y
N
1X = 0.25Y Comparative advantage in X
1Y = 4Y
Rate is 1Y for 3X and it lies between their opportunity cost ratios so trade would be favourable.
A is the answer
Q27) D Because negative BOP means depreciating exchange rate while inflation would decrease because people would import less as the prices of imports would further rise due to depreciation of exchange rate.
Q8) D Definition of cross elasticity of demand.
Q13) C and D are totally wrong. When price of compliment increases, the demand for that good falls so A cannot be right. B is the answer because price of substitute may have increased further therefore B is the answer.
Q30) C because when taxes increases, people are left with left money to consume.
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