Price cap regulation improves cost control incentives relative to rate-of-return regulation

Indicate whether the statement is true or false


T The price cap comes from outside the firm, and because anything it can do to improve its profit will lead to gains it can keep, the firm has more cost control incentive.

Economics

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Maryanne expects to work for another 30 years and expects to live another 10 years after she retires. If Maryanne completely smooths consumption over her lifetime, for every $1,000 increase in wealth, she will use ________ for consumption each year

A) $10.00 B) $25.00 C) $100 D) $333

Economics

The AD Curve ________

A) demonstrates how central banks respond to changes in interest rates by changing the inflation rate B) shows how changes in equilibrium output affect the inflation rate C) explains long run fluctuations in output and inflation D) all of the above E) none of the above

Economics

"Cheap talk" is considered cheap because

A) communications via phone or email these days has a cost that is close to zero. B) a firm can say anything, but may actually do something different. C) the cost of talking is far outweighed by the gains to be made in coordinating efforts. D) firms avoid the costs of hiring lawyers.

Economics

Suppose capital and labor are perfect substitutes resulting in a production function of q = K + L. That is, the isoquants are straight lines with a slope of -1

Derive the long-run total cost function TC = C(q) when the wage rate is w and the rental rate on capital is r.

Economics