Why is value created when someone buys something for themselves?
A. Because the cost to produce the good is greater than the price of the good.
B. Because the price of the good is greater than the value of the good to the buyer.
C. Because the buyer values the good more than it costs the seller to produce.
D. Because the buyer values the good as much as it costs the seller to produce.
Answer: C. Because the buyer values the good more than it costs the seller to produce.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The problem with efficient component pricing is that it can invite entry that is inefficient
Indicate whether the statement is true or false
Sellers have a strong incentive to lobby government for legal restrictions that would reduce the intensity of competition in their market because
a. the firms wish to be more efficient than competition will permit. b. competition tends to result in lower prices and lower profits. c. legal restrictions that lessen competition in a market generally benefit consumers. d. the firms fear that intense competition will lead to higher profits that will attract additional rivals into the market.
Which of the following contributed to the crisis of 2008?
a. a doubling of the price of imported oil during 2007-2008 b. a sharp increase in the price of housing during 2008 c. inclement weather in 2008 d. falling resource prices and a reduction in the cost of production