Mutually beneficial trade is possible because of differing marginal utilities
a. True
b. False
Indicate whether the statement is true or false
True
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Which of the following policy tools is directly controlled by the Trading Desk at the Federal Reserve Bank of New York?
A) the spread between the discount rate and the federal funds rate B) the spread between the federal funds rate and the interest rate on banks' required reserves C) open market sales and purchases D) the required reserve ratio
Predatory pricing: a. occurs when a firm increases price in order to exploit inelastic demand by consumers
b. occurs when a firm prices below average variable cost in order to drive competitors out of the market. c. is difficult to distinguish from vigorous competition in practice. d. is characterized by both (b) and (c).
Price floors are introduced to:
(a) Help suppliers as they know that the maximum price they will receive for their output is above equilibrium. (b) Help suppliers as they know that the minimum price they will receive for their output is above equilibrium. (c) Help consumers to ensure that they are not exploited by producers and allow them to purchase at a price lower than equilibrium. (d) Prevent inflation within the market.
Inflationary gaps can be cured by either cutting government expenditures or raising taxes.
Answer the following statement true (T) or false (F)