What would be the economic rationale for homeowners associations to host "yard of the month" awards?
What will be an ideal response?
Homeowners associations clearly view beautiful yards as something desirable for the neighborhood. They not only provide direct benefits to those who keep up their yards but also bestow benefits on the rest of the residents as well. However, individual homeowners are not likely to take into account the positive externality they provide. As a consequence they are likely not to keep their yards as beautiful. The "yard of the month" award is an effort to get them to recognize those benefits. To the extent that those who participate make their yards more attractive, this helps to bring the beautification of the neighborhood to a more efficient level.
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La Dila and Swiss Pro are the only two firms in an industry. The firms initially charge equal prices for their products, which are perfect substitutes. What happens if La Dila decides to lower its price slightly?
A) La Dila will lose all its market share. B) Swiss Pro will gain market share. C) La Dila will face the entire market demand. D) Swiss Pro will earn positive economic profits.
In Figure 3-3 above, when income is 700, unplanned inventory investment is
A) -180. B) 180. C) 300. D) -300. E) -120.
Suppose a monopolist has positive fixed costs and constant marginal costs. If the government regulates a monopoly's price to marginal cost, in the long run:
A. the monopolist will earn a profit if ATC > MC. B. the monopolist will earn a profit if ATC > P. C. the monopolist will exit the industry. D. the monopolist will earn zero profits.
The Fed's buying and selling of existing government securities is called
A. changes in the reserve requirement ratio. B. open market operations. C. changes in the difference between the discount rate and the federal funds rate. D. market interventions.