A necessary assumption behind the invisible hand theorem is that:
A. market forces produce inefficient outcomes.
B. market forces are determined by cultural norms.
C. people behave rationally.
D. the price mechanism is not constrained by political or social forces.
Answer: C
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The main determinant of the discount rate on a privately issued bank note was:
a. how long the issuing bank had been in operation. b. who was on the issuing bank's board of directors. c. the general reputation of the issuing bank. d. the distance of the issuing bank from the location where the note was being used.
If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect
a. a lower rate of return on their human capital investment. b. an increase in their employment prospects. c. a higher wage rate than they were expecting when they selected their major. d. an increase in the demand for accountants.
The world price of a ton of steel is $1,000 . Before Russia allowed trade in steel, the price of a ton of steel there was $650 . Once Russia allowed trade in steel with other countries, Russia began
a. exporting steel and the price per ton in Russia remained at $650. b. exporting steel and the price per ton in Russia increased to $1,000. c. importing steel and the price per ton in Russia remained at $650. d. importing steel and the price per ton in Russia increased to $1,000.
P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below.
Suppose QRS-TV enters into an agreement with P-TV that gives QRS-TV the exclusive right to air a reality show during this time slot. QRS-TV would have to pay P-TV ________ in order to persuade P-TV to enter into this agreement.
A. at least $5 million B. nothing C. more than zero, but less than $5 million D. at least $10 million