Assume that many households and businesses reduce their spending only because they expect other households and consumers to reduce their spending. Also suppose that all households and consumers would be better off if they did not reduce their spending
This situation best describes the:
A. real-business-cycle theory.
B. rational expectations theory.
C. concept of coordination failures.
D. adaptive expectations theory.
C. concept of coordination failures.
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A significant downside to network externalities is that
A) firms may network with unethical suppliers or distributors. B) there may be large switching costs to firms changing technologies. C) there may be large switching costs to consumers of changing products so that consumers end up using products with inferior technologies. D) the costs of using celebrity endorsements may be very high.
The period between a business cycle peak and a business cycle trough is called
A) recalculation. B) recession. C) diffusion. D) expansion.
There are different interest rates associated with many types of securities. Which of the following statements is correct?
A) they vary depending on the liquidity of the security B) they vary depending on the risk associated with the security C) except in very unusual times, most interest rates move together D) all of the above E) none of the above
A common feature of regulated industries is cross-subsidization, which is a situation when one group of customers pays prices above costs while another group of customers pays prices below costs. The one group is subsidizing the other group
Is this practice more consistent with the capture hypothesis or the share-the-gains, share-the-pains theory? Explain.