If inflation is correctly anticipated, in a transaction between borrowers and lenders, inflation
a. will not reduce purchasing power of the money paid back
b. will redistribute purchasing power from borrowers to lenders
c. will not redistribute purchasing power
d. will redistribute purchasing power from to lenders to borrowers
e. cannot be taken into consideration when a loan is negotiated
C
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A competitive market maximizes social welfare because in a competitive market,
A) profits are zero. B) price equals marginal cost of the last unit produced. C) price equals average cost of the last unit produced. D) there is free entry and exit.
People who choose not to participate in fair gambles are called
a. risk takers. b. risk averse. c. risk neutral. d. broke.
Exhibit 10-1 A monopolistic competitive firm
As presented in Exhibit 10-1, the short-run profit-maximizing output for the monopolistic competitive firm is:
A. zero units per day. B. 200 units per day. C. 400 units per day. D. 600 units per day.
The fact that some resource prices are fixed by contracts helps explain why firms _____
Fill in the blank(s) with the appropriate word(s).