The cost of holding money balances increases when
a. the purchasing power of money rises.
b. the money interest rate increases.
c. the price of goods and services falls.
d. consumer income expands.
B
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Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
If Candidate X is running against Candidate Z, by moving to the right Candidate X would:
A. force Z to move farther to the right in order to keep the same number of votes. B. not lose any votes from voters on the left and gain some votes from Z. C. lose some votes from voters on the far left but gain approximately the same number of votes from Z. D. win the election if the move placed X anywhere to the right of 25 on the spectrum.
When does a private solution to a negative externality fail to allocate resources efficiently?
What will be an ideal response?
Which of the following can defeat the profit-maximizing strategy of price discrimination?
a. consumer surplus b. deadweight loss c. market power d. arbitrage
According to the infant industry argument for trade protectionism:
A. trade barriers must be used to protect domestic workers. B. new industries need to be shielded from competition in the early stages of learning by doing. C. tariffs imposed to aid new industries should never be removed. D. new industries are capable of competing with established rivals.