What triggers exit in a competitive market? Describe the process that ends further exit
What will be an ideal response?
When firms in a competitive market are incurring an economic loss, some of the firms will exit the market. As these firms exit, the supply decreases and the price rises. The rise in the price eventually eliminates the economic loss, at which time exit stops.
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The authors note that an appropriate discount rate for most U.S. households is near 5%. However, suppose you are considering the decision to attend graduate school, and you already have large credit card balances from your undergraduate years
If you decide to use a higher discount rate (e.g., 10%) to reflect your higher opportunity cost of money, what impact does this change in the discount rate have on the net present value of a graduate degree? A) Increases NPV B) Decreases NPV C) NPV would not change as long as we use nominal costs and returns. D) NPV may increase or decrease, and we cannot determine the direction of change without more information.
An important effect of fractional reserve banking is that: a. bankers' choices about how much to lend can affect the money supply
b. the commercial banking system has complete control over total reserves. c. bankers always turn every dollar of excess reserves into loans. d. a new bank deposit allows a bank to extend loans of the same amount to borrowers.
If the price elasticity of demand for radios is 2.5 (dropping the minus sign), then a 50 percent reduction in the price of radios will lead to
a. the sale of 200 additional radios. b. the sale of 125 percent more radios than before. c. the sale of 150 percent more radios than before. d. the sale of 25 percent more radios than before.
A supply curve can be used to measure producer surplus because it reflects
a. the actions of sellers. b. quantity supplied. c. sellers' costs. d. the amount that will be purchased by consumers in the market.