Soda companies pay universities for the exclusive right to sell their products on campus. For example, the University of Buffalo agreed to sell only Pepsi on campus in exchange for $220,000 per year. This agreement:
A. is harmful to students because the extra money gained by the university cannot be used for their benefit.
B. may be beneficial for students, depending on how the university uses the $220,000.
C. is beneficial for students if Pepsi charges a monopoly price on campus.
D. is beneficial for students because they no longer have to make a choice about which soda to purchase.
Answer: B
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GDP understates the value of output produced by an economy because it
A) includes environmental degradation caused by increased output production. B) includes transactions that do not take place in organized markets, such as home-cooked meals. C) excludes value added from the underground economy, such as tips taken "under the table." D) excludes the value of the wages and benefits of government employees.
A firm's short-run supply curve is the same as _____ if it produces the good
A. its marginal revenue curve B. the upward-sloping part of its marginal cost curve C. its marginal cost curve above minimum average variable cost D. its marginal cost curve above minimum average total cost
Your roommate argues that he can think of no better situation than living in a deflationary economy, as prices of goods and services would continuously fall. You disagree and argue that during a deflation, people can be made worse off because
A) the purchasing power of the currency would decrease. B) the value of the real interest rate will drop below the nominal interest rate. C) borrowers will have to pay increasing amounts in real terms over time. D) the purchasing power of people's incomes would increase.
The representative consumer's discount factor B
A. equals the share of production going to labor B. is a parameter capturing how patient the consumer is C. is a choice parameter controlling consuming versus saving D. is the reduction in price from a competitive factor market