If an important component of a firm's production process is difficult to specify in a contract and even more difficult to enforce in its production standards, then it probably makes sense to:
A. vertically integrate upstream to build the component.
B. incur information cost.
C. use a simple short-term contract.
D. buy the component in the open market.
Answer: A
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Which of the following statements would be true of an economy that can be characterized as being to the left of the IS curve?
A) There is an excess demand for commodities at the existing interest rate. B) There will be a tendency for the level of output to decrease. C) There is an excess supply of commodities at the existing interest rate. D) There will be a tendency for interest rates to fall.
What factors can cause the labor supply curve to shift?
Firms in a high-wage nation such as the U.S. can compete effectively with imports from low-wage nations if
a. skill levels are identical in the nations b. the U.S. reduces tariffs on imports c. low-wage nations impose tariffs on U.S. made goods d. labor productivity is higher in the low-wage nation e. labor productivity is higher in the U.S.
Suppose that the equilibrium price of T-shirts increases and the equilibrium quantity of T-shirts decreases. This is best explained by a(n):
A. decrease in the demand for T-shirts. B. increase in the demand for T-shirts. C. increase in the supply of T-shirts. D. decrease in the supply of T-shirts.