iPods are less expensive in Canada than the United States, once the exchange rate is taken into account. This is an indication that
A) the nominal exchange rate is equal to one.
B) purchasing power parity does not hold.
C) the law of one price holds.
D) the exchange rate is fixed.
B
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In the classical view, if desired saving exceeds desired investment
A) the interest rate would increase. B) government spending must rise. C) government spending must fall. D) the interest rate would decline.
Consider a monopolist which sells output in two markets, the home market and the foreign market. Initially the monopolist is unable to price discriminate and sets a single price for both markets
However, the demand in the foreign market is such that at the price the monopoly sets, no goods are sold in the foreign market. If the monopolist is then able to price discriminate, will the overall deadweight loss increase or decrease? Explain.
Lenders generally want a higher interest rate to compensate them when loans stretch over a longer period because:
A. lenders want to be compensated for being unable to get their money back quickly. B. the opportunity cost increases over time. C. there's more uncertainty about potential future investment opportunities. D. All of these are true.
Jessica's marginal cost for producing a pitcher of lemonade is $0.25. Therefore, $0.25 is her:
A. equilibrium price. B. reservation price. C. producers surplus. D. marginal revenue.