When strategic interactions are important to pricing and production decisions, a typical firm will
a. set the price of its product equal to marginal cost.
b. consider how competing firms might respond to its actions.
c. generally operate as if it is a monopolist.
d. consider exiting the market.
b
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The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total producer surplus equals
A) $0. B) $60. C) $90. D) $120. E) None of the above answers is correct.
Our capital account balance in 2009 was a
A. surplus of about $500 billion. B. surplus of about $400 billion. C. deficit of about $500 billion. D. deficit of about $700 billion.
The principal result of the rising value of the U.S. dollar in the mid-1990s was a(n)
a. balance of payments deficit. b. balance of payments surplus. c. increase in the rate of inflation. d. increase in the unemployment rate.
Calculate the equilibrium interest rate.
Consider the closed economy of country A where KI = 0. In year 2009, government expenditure (G) is $300 billion, the total tax collected (T) is $900 billion and tax being transferred (TR) is $200 billion. The loanable fund market is currently in equilibrium, and the total demand equation (including SG) is DLF: r =0.04 - 0.000025Q, where r is the real interest rate, and that private saving, SP, equals $800 billion at equilibrium