Used car buyers believe a car is good quality when the seller signals the car's quality by offering a warranty because
A) car sellers would never lie.
B) car buyers are gullible.
C) the signal cannot be false.
D) a false signal can be costly to the seller.
D
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Which of the following is an assertion of the Heckscher-Ohlin model?
A) The wage-rental ratio is determined by relative product prices. B) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good. C) In the long-run, labor is mobile and capital is not. D) Factor price equalization will occur only if there is costless mobility of all factors across borders. E) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.
When an economy is below full employment and the government has a budget deficit, that deficit _________.
What will be an ideal response?
Refer to Figure 8.1, which shows a family of average cost curves. The average fixed cost at a given level of output is represented by:
A. the vertical distance between Curve 1 and Curve 2 at a given level of output. B. the vertical distance between Curve 1 and Curve 3 at a given level of output. C. the vertical sum of Curve 1 and Curve 2 at a given level of output. D. the vertical sum of Curve 1 and Curve 3 at a given level of output.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.