For a given future amount of money, its present value with be lower if ______________
Fill in the blank(s) with the appropriate word(s)
Answer: The assumed interest rate is higher
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When the macroeconomy is doing poorly (as it was in 2009), profits of existing firms decrease, creating an incentive for existing firms to exit unprofitable markets
This in turn makes it more difficult for the remaining firms to mark up price over average or marginal cost. Indicate whether the statement is true or false
Diminishing marginal returns imply that marginal cost is falling.
Answer the following statement true (T) or false (F)
Limit pricing occurs when a firm sets price:
A. equal to marginal cost. B. equal to average cost. C. at different amounts for different groups of consumers. D. so low that other firms are prevented from entering the market.
The consumer price index (CPI) is a measure of inflation for
A. an elderly couple recently retired to Yuma, Arizona. B. farmers. C. a typical consumer of the market basket used to calculate the index. D. Apple Computer.