A Middle Eastern country has an oil reserve that it can extract for a profit of $60 a barrel today, $65 a barrel in two years, $70 a barrel in three years, and $75 in four years. The current market rate of interest is 7 percent. When should this country tap into its oil reserve to obtain the most profit per barrel in present value terms?
A. Today
B. Two years
C. Three years
D. Four years
A. Today
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All of the following are assumptions of the production possibilities curve EXCEPT
A) resources are fully employed. B) there is a fixed time period. C) there is a fixed level of technology. D) there is a fixed demand for the products.
Perfect competition is the term used to describe:
a. an industry in which a few price-taking firms produce identical products b. an industry in which numerous price-taking firms produce identical products. c. an industry in which firms are price takers and compete for market share by varying the qualitative characteristics of products. d. an industry in which numerous firms are price makers and produce identical products.
Under marginal cost pricing by a natural monopoly,
a. price is less than average cost b. there will be a welfare cost. c. the producer will earn a higher than normal rate of return. d. there is little or no incentive for the producer to hold down costs.
With sticky nominal wages an unexpected decline in aggregate demand can be expected to cause.
What will be an ideal response?