Goldie is indifferent between option A, which gives her $9,000 for sure, and option B, which gives her $3,000 with probability 1/3 or $18,000 with probability 2/3. Goldie's cost of risk for option B is
A) zero.
B) $1,000.
C) $3,000.
D) $4,000.
D
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Assume that the market for soybeans is perfectly competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect
A. new firms to enter, causing the market price of soybeans to increase. B. some firms to exit, causing the market price of soybeans to increase. C. some firms to exit, causing the market price of soybeans to decrease. D. new firms to enter, causing the market price of soybeans to decrease.
The aggregate demand curve is
A) upward sloping. B) a vertical line at potential output. C) a horizontal line at the current price level. D) downward sloping.
The current account records all transactions below EXCEPT for
A) net exports of goods and services. B) net interest income. C) net foreign investment. D) net transfers.
Price discounts to selected buyers with the intent of driving out smaller competitors is:
a. widespread in all industries. b. common in the retailing industry only. c. illegal under the Robinson-Patman Act. d. allowed if the four-firm concentration ratio is less than 50 percent. e. beneficial to consumers in the long run.