For which pair of firms would a merger be horizontal?
A. Avis Car Rentals and United Airlines
B. Nike and Starbucks
C. Barnes and Noble and Wordsworth Booksellers
D. US Steel and Boeing
Answer: C
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The principal-agent problem is the issue of inducing
A) agents and principals to work hard. B) principals to act in the best interests of agents. C) agents to act in the best interests of principals. D) None of the above answers is correct.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Why is the PPF bowed out in the HeckscherOhlin model?
A. Capital is specific to the production of one good. B. Labor is specific to the production of the other good. C. There are increasing opportunity costs of producing each good. D. Labor is not perfectly mobile between the production of the two goods.
In terms of market failure, underallocation means the economy ______.
a. is controlled by a single-seller b. is controlled by the government c. has produced too little d. has produced too much