Which of the following increases the demand for a good?
A) a rise in the price of a complement
B) the expectation that future income will be higher
C) an increase in income, assuming the good is an inferior good
D) a decrease in the number of buyers
E) a fall in the price of a substitute
B
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What is the trade-off that consumers face when buying the product of a monopolistically competitive firm?
A) Consumers pay higher prices but the products are produced by highly efficient firms. B) Consumers pay lower prices but have fewer choices. C) Consumers pay a price greater than marginal cost, but have the luxury of choices more suited to their tastes. D) Consumers pay higher prices but receive better quality goods compared to the output of perfectly competitive firms.
A discount bond involves
A) interest payments from the borrower to the lender periodically during the life of the loan. B) payment by the borrower to the lender of the face value of the loan at maturity. C) no payment of principal by the borrower to the lender. D) payment of interest by the borrower to the lender every six months during the life of the loan.
Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the
a. free rider problem. b. law of comparative advantage. c. infant-industry argument. d. law of diminishing marginal returns.
The real interest rate is equal to the nominal interest rate minus:
A. accounting profit. B. economic profit. C. taxes. D. the inflation rate.