Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year
A) will rise.
B) will fall.
C) will not change.
D) could rise, fall, or stay the same.
B
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The gold standard
a. has been in operation since the establishment of the Federal Reserve Board b. has been in operation since shortly after World War I c. has been in operation since the Bretton Woods agreement was signed d. was in operation for about 50 years before World War I e. was in operation from the date of the Bretton Woods agreement until the devaluation of the U.S. dollar in 1971
Market failures are less likely to occur whenever
A) private returns are greater than social returns. B) social returns are greater than private returns. C) the free market produces less than what is socially optimal. D) new firms can easily attract start-up capital.
Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms. When you get to the pharmacy, you notice the name brand allergy medicine is more expensive than its generic equivalent. You purchase the generic
equivalent and demonstrate all of the following EXCEPT A) the principle of substitution of one product for another. B) the principle of diminishing marginal utility. C) when price decreases, the quantity demanded increases. D) a price change may affect consumer optimum.
Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing
A. cars. B. cheese. C. both cheese and cars. D. neither cheese nor cars.