Assume that the foreign exchange market is in equilibrium and there are no arbitrage opportunities. If the market price of 200 rubles is $1, and the market price of one yen is 2 rubles, how many yen can you buy with $4?
a. 200
b. 2,000
c. 400
d. 4,000
e. 100
C
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From the economist's perspective, "market failures" basically arise when:
A. the market system is unable to adapt to or to accommodate change. B. the quantity demanded for a good or service is greater than the quantity supplied of the good or service. C. demand and supply do not accurately reflect all the benefits and all the costs of production. D. the quantity supplied of a good or service is greater than the quantity demanded for a good or service.
An example of an external cost of tobacco is
A. increase life insurance premiums of smokers. B. cigarette burns on the furniture of smokers. C. unnecessary deaths induced by second-hand smoke. D. matches.
Imports are goods and services bought domestically but produced in other countries
Indicate whether the statement is true or false
Advertising that uses celebrity endorsements is most likely intended to
a. increase elasticity of demand for the advertised product. b. reduce the ability of markets to allocate resources efficiently. c. provide a signal of product quality. d. be useful only for psychological effects.