Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP?
C = 1,000 + 0.8Y
I = 1,500
G =1,250
NX = 100
A) $3,080 B) $3,850 C) $6,930 D) $19,250
D
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Free markets produce allocatively efficient outcomes and have no flaws.
Answer the following statement true (T) or false (F)
The divergence between money costs and opportunity costs will be greatest in which of the following situations?
a. A university purchases 100 computers. b. A university employs people from town in the commissary (people prefer this job to working in the paper factory). c. A university employs otherwise unemployed teenagers to paint crosswalks and curbs. d. A university replaces the roof of the fine arts building.
Figure 13-4
?
The above matrix (Figure 13-4) displays the possible profit results of two firms, A and B, from following two different possible strategies: charging a high price and charging a low price. In each cell, the first number is the profit of firm A, and the second number is the profit of firm B.
a. Assume that collusion is not possible. Determine the optimal strategy for each firm. Explain why it is the best strategy to follow.
b. Based on your answer to a., explain why firms collude. What are the pitfalls of collusion?
What will be an ideal response?
A cost of inflation is that it:
A. reduces the informational content of prices. B. makes everyone poorer. C. makes the poor poorer and the rich richer. D. it raises real interest rates.