Higher rates of interest increase the opportunity cost of holding money balances
a. True
b. False
Indicate whether the statement is true or false
True
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The above table gives the demand and supply schedules for cat food. If the supply increases by 20 tons at every price, what is the new equilibrium price and quantity?
What will be an ideal response?
Suppose the market supply curve for wheat is shown in the above figure. Calculate the producer surplus when price is $2 per bushel. If legislation mandates that the price be $1 per bushel, what is the resulting loss in producer surplus?
What will be an ideal response?
Mutually beneficial trade will occur whenever the exchange rate between the goods involved is set at a level where: a. each country can export a good at a price below the opportunity cost of producing the good in the domestic market. b. each country can import a good at a price below the opportunity cost of producing the good in the domestic market. c. the exchange ratio is exactly equal to
the opportunity cost of producing the good in each country. d. each country will specialize in the production of those goods in which it has an absolute advantage.
An airline industry study recently reported, "Evidence is abundant that larger firms are not more efficient or less costly simply because they are larger. In fact, other things equal, the largest carriers tend to have a higher level of unit costs, possibly caused by the difficulties of managing an airline of large size." This means that
a. there are increasing returns to scale in the airline industry. b. the airline industry has constant returns to scale. c. the larger airlines are not profitable. d. airlines are experiencing decreasing returns to scale.