In a competitive industry buffeted by demand supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return
b. Positive earnings
c. Mean reversion
d. None of the above
c
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Imagine you are a buyer in a double oral auction with a reservation value of $10 and there is a seller asking $8
a. How much will you gain from accepting this offer? b. If you are the only buyer, and you know that the lowest ask price is $2, should you accept this offer?
Discuss the relationship between PPP and the Law of One Price
What will be an ideal response?
The equity argument for government financing of education _____
a. is dependent upon the socialization argument b. does not imply government financing c. does not imply government production d. is dependent upon externalities being inframarginal
Most people buy insurance because they
a. are risk lovers b. enjoy the gamble c. are risk neutral d. are risk averse