When a firm is a price-taking firm,
A. raising the price of the product above the market-determined price will cause sales to fall nearly to zero.
B. many other firms produce a product that is identical to the output produced by the rest of the firms in the industry.
C. the price of the product it sells is determined by the intersection of the market demand and supply curves for the product.
D. all of the above
Answer: D
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Suppose the daily demand for Coke and Pepsi in a small city are given by QC = 90 - 100PC + 400(PP - PC) and QP = 90 - 100PP + 400(PC - PP), where QC and QP are the number of cans Coke and Pepsi sell, respectively, in thousands per day. PC and PP are the prices of a can of Coke and Pepsi, respectively, measured in dollars. The marginal cost is $0.45 per can for both Coke and Pepsi. What is Coke's best response function?
A. QC = 200PP - 67.5 B. QC = (90 + 400PP) - 500PC C. PC = 0.315 + 0.4PP D. PC = (0.18 + 0.8PP) - 0.002QC
Because of the adverse selection problem
A) good credit risks are more likely to seek loans causing lenders to make a disproportionate amount of loans to good credit risks. B) lenders may refuse loans to individuals with high net worth, because of their greater proclivity to "skip town." C) lenders are reluctant to make loans that are not secured by collateral. D) lenders will write debt contracts that restrict certain activities of borrowers.
According to the life-cycle hypothesis ________
A) households consume on the basis of their current income and liabilities B) household consumption as a percentage of income varies over one's lifetime C) current income is a function of future income D) cycling to work everyday allows one to live a longer life
With the increase in school attendance throughout the world, the newest challenge for development economists is increasing:
A. availability of education to children. B. the quality of education to children. C. the availability of college education. D. the consistency of education across countries.