Scarcity arises because
A. shortages always occur.
B. natural resources are abundant.
C. some people do not behave in a rational manner.
D. resources are limited and are inadequate to meet all human wants.
Answer: D
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Assume glassware is produced by firms in a competitive industry, one of which is Gregor's Glassworks.
(i) Suppose a rent increase is imposed on Gregor's Glassworks but not on its competitors. When would the rent increase cause Gregor to exit the industry? Explain. (ii) Suppose an earthquake destroys most of Gregor's stock but does not affect his competitors. When would the damages cause Gregor to exit the industry? Explain.
Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that
A) the United States has no comparative advantage B) Germany has a comparative advantage in butter. C) the United States has a comparative advantage in butter. D) Germany has a comparative advantage in widgets. E) Germany has lost its comparative advantage.
Banking crises have occurred throughout the world. What similarities do we find when we look at the different countries?
What will be an ideal response?
A common characteristic in oligopolistic markets is
a. consideration of rivals' reactions. b. standardized products. c. high profits. d. unused capacity.