The optimal level of inventories is the level at which the extra cost (in lost sales) from lowering inventories by a small amount is greater than the gain (in interest revenue and decreased storage costs).
Answer the following statement true (T) or false (F)
False
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The key feature of monopolistic competition that distinguishes it from perfect competition is
A) many sellers. B) barriers to entry. C) interdependency. D) product differentiation.
U.S. imports of sugar
a. have been illegal since the mid-1980s b. harm U.S. sugar producers c. increase the U.S. government's revenue d. are restricted by tariffs e. are restricted by import quotas
Which of the following is not a characteristic of a perfectly competitive market?
a. Sellers set the price of the product. b. There are many sellers. c. Buyers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.
Suppose there are only two goods (Good A and Good B) and the average person buys 4 of Good A in a year and 3 of Good B. If, in the base year, the Price of Good A is $5 and the Price of Good B is $10, and in the next year the Price of Good A is $4 and the Price of Good B is $12, one problem with the CPI way of calculating inflation is
A. it fails to recognize that people will substitute (to some degree) Good A for Good B and therefore understates the degree of inflation. B. it fails to recognize that people will substitute (to some degree) Good A for Good B and therefore overstates the degree of inflation. C. it understates the importance of Good A in the budget. D. it understates the importance of Good B in the budget.