Question 2 1 pts A simultaneous increase in the quantity of a good sold accompanied with the increase in the price of this good violates the law of demand O is typical for the case of a demand shock O negatively affects farmers growing coffee is typical for the case of a supply shock Question 3 1 pts Consider an open, trading economy with two sectors: agriculture and production of cars. There are two factors used in the production of both industries: labor, mobile between the industries, land specific to agricultural production and capital specific to the production of cars. Workers spend most of their earnings on agricultural products. Formation of free trade area led the decrease in the prices of both goods by 5%. Which one of these observations will apply? O Labor force allocation remains the same O The labor/capital ratio increases in both sectors O The manufacturing sector now uses relatively more labor None of the other three options are correct Question 4 1 pts Brazil produces cars, which require labor and capital to produce, and coffee, which require labor and land to produce. Brazil exports coffee. If the world price of coffee increases then Capital to labor ratio in car industry will increase O Brazil will completely specialize in coffee production O Capital to labor ratio in car industry will not change Capital to labor ratio in car industry will decrease