Suppose the following information is known about a market:
1. Sellers will not sell at all below a price of $2.
2. At a price of $10, any given seller will sell 10 units.
3. There are 100 identical sellers in the market.
Assuming a linear supply curve, use this information to derive the market supply curve.
First, Q = 100q since all firms are identical. This gives two points: (p = 2, Q = 0 ) and
(p = 10, Q = 1000 ). From the first point, it is known that p = 2 + bQ. When Q = 1000, 10 = 2 + b(1000 ). Solving for b yields b = .008. Rearranging to solve for Q yields: Q = -250 + 125p or P= 2 + .008Q.
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A) $0.50 B) $1.00 C) $1.50 D) $7.50
Assume Joe invests a total of $10,000 in a company - $5,000 of which is his own money and $5,000 which he borrowed at a 10% interest rate. If the company's stock value decreases by 5% in one year at which time Joe sells his shares of the stock, what is Joe's rate of return on his investment?
a. ?5% b. ?10% c. ?20% d. ?30%
The fiscal agent of the U.S. government is the
A. Federal Reserve System. B. Securities and Exchange Commission. C. U.S. Treasury. D. Congress.
According to the rational expectationists
A. even if there were a recession or substantial inflation, the best government policy would be to do nothing. B. the dramatic oil price shocks of 1973 and 1979 created declines in aggregate supply, lowering the natural level of real GDP. C. the prime economic mover is aggregate supply, not aggregate demand. D. All of the choices/statements are true.