The argument that suggests that regulators balance the interests of firms, consumers, and legislators is called
A. the creative response theory.
B. the theory of optimal regulation.
C. the capture hypothesis.
D. the share-the-gains, share-the-pains theory.
Answer: D
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The most volatile component of aggregate demand is
A. consumer spending. B. government purchases. C. net exports. D. investment spending.
When the real interest rate is less than zero, then:
a. a creditor will gain purchasing power. b. a creditor will just break even on his or her real loan return. c. a creditor will lose purchasing power. d. a creditor will benefit from inflation. e. a creditor's purchasing power will not be affected, because the nominal interest rate is greater than zero.
Duke is a highly skilled negotiator who could work for many law firms. The law firm that hires Duke is able to collect twice as much revenue per hour of Duke's time than it can for any other negotiator in town. The increased revenue will:
A. all go to Duke because, if it didn't, another firm could hire Duke away. B. be split between Duke and the law firm, but how it will be split cannot be determined without more information. C. all go to the law firm because the firm bears the risk of running the business. D. be evenly split between Duke and the law firm to maximize surplus.
How do economies of scale contribute to the development of an oligopoly?
A. Economies of scale make small-scale producers inefficient. B. Economies of scale make it legally difficult for new firms to enter. C. Economies of scale are guaranteed when a patent is granted. D. Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.