In a perfectly competitive market, which of the following is the main factor that affects consumers' decisions on which firm to purchase a good from?
A. price
B. quality
C. reputation
D. customer service
Answer: A
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Real-world accuracy of the money multiplier can be affected by:
a. the amount of loans provided by nonbanks. b. the way the public divides its holding of M1 between currency and certificates of deposit. c. the willingness of banks to loan excess reserves. d. all of these.
Suppose capital and labor are used in fixed proportions so that each machine requires only one worker. If a decline in the price of capital occurs, then the demand for labor will:
A. decrease solely because of the substitution effect. B. increase solely because of the substitution effect. C. increase solely because of the output effect. D. decrease solely because of the output effect.
Based on your understanding of the Phillips curve, explain what happens to actual inflation (relative to expected inflation) when the actual unemployment rate is either above or below the natural rate of unemployment
What will be an ideal response?
If lenders think that a particular borrower might default, they will demand a:
A. higher interest rate to decrease the amount of risk incurred. B. lower interest rate to decrease the amount of risk incurred. C. higher interest rate to make it worth taking that risk. D. lower interest rate to make it worth taking that risk.