Use the following statements to answer this question:
I. If the extent of a market is broader, it is less likely that firms in the market can influence the market price.
II. In determining whether two different products belong to the same market, it is necessary to know whether the two products can be used as substitutes for each other.
A) I and II are both false.
B) I is false, and II is true.
C) I is true, and II is false.
D) I and II are both true.
D
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Suppose the market for a good is initially in equilibrium. Which of the following is most likely to happen if supply increases by a smaller amount than the increase in demand?
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In the long run, a 1% increase in real GDP tends to
A) cause a 1% increase in the demand for money. B) cause a less than 1% increase in the demand for money. C) cause a greater than 1% increase in the demand for money. D) have virtually no effect on the demand for money, because the interest rate is the main determinant of the demand for money.
If a cartel is unable to monitor its members and punish those firms that violate the agreement, then
A) the member firms will each act as price setters. B) the cartel will prosper in the long run. C) the market will become a monopoly. D) the cartel will fail.
The supply of loanable funds curve is
a. upward sloping because fewer people are persuaded to forgo current consumption as the interest rate rises b. downward sloping, showing that more investment will be undertaken as inflation decreases c. upward sloping because the opportunity cost of goods and services that must be forgone increases d. downward sloping, showing that as more funds are made available, the risk cost of loaning funds decreases e. usually horizontal