A decrease in the marginal benefit arising from a specialized investment will cause the optimal contract length to:
A. decrease.
B. increase.
C. either increase or decrease.
D. remain constant.
Answer: A
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The firm's production function is the relationship between the ________ and ________
A) output produced; the quantities of all inputs B) maximum output attainable; the quantity of variable inputs C) possible range of maximum output; the quantity of variable inputs D) maximum output attainable; the quantities of both labor and capital
Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right.
If Candidate Y is running against Candidate Z:
A. Both candidates will have an incentive to move toward each other's position. B. Candidate Y will have an incentive to move to the left, and Candidate Z will have an incentive to move to the right. C. Both candidates will have an incentive to move to the left. D. Neither candidate has any incentive to move.
If real GDP falls from one period to another, we can conclude that:
A. deflation occurred. B. inflation occurred. C. nominal GDP fell. D. None of these necessarily occurred.
The following situation is an example of an import substitution strategy. Costa Rica has a comparative advantage in the production of coffee and, as a result, the Costa Rican government grants incentives to coffee planters to improve their performance in the international marketplace.
Answer the following statement true (T) or false (F)