Which of the following would be illegal under the Clayton Act?
A. Executives from Nike and Reebok meet to fix the price of athletic shoes.
B. Ford and Firestone Tire agree to merge.
C. Xerox will only sell its copy and print machines if buyers agree to also buy a service contract.
D. Healthy Energy Bar Co. falsified a study showing the health benefits of its product and uses that study in its advertising.
Answer: C
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The fraudulent delivery of low quality experience goods at high prices is more likely if
a. interest rates decline b. information about notorious firms is speedily disseminated c. price premiums for allegedly high quality increase d. sellers invest in non-transferable reputation e. none of the above
Nicole's income is $1,000 per month. She spends all of it on shoes (S) and books (B). Shoes cost $50 and books cost $25. Her marginal rate of substitution for shoes with books is MRSSB = 2B/3S. Illustrate her utility-maximizing combination of shoes and books and draw her price-consumption curve if the price of books rises to $30.
What will be an ideal response?
Under the modern system of fractional reserve banking, banks
A. keep cash reserves equal to only a fraction of their deposit liabilities. B. loan out their excess reserves at interest, which is the key to their profitability. C. are always potentially vulnerable to runs. D. All of these responses are correct.
Which of the following statements about government debt is false?
A. Government has the power to tax to finance its debt. B. Almost half of U.S. government debt is internal to the government. C. Government can create money to finance its debt. D. Most U.S. government debt is owned by foreigners.