A dilemma of regulation is that:
A. the regulated price that achieves allocative efficiency is also likely to result in persistent
economic profits.
B. the regulated price that results in a "fair return" restricts output by more than would
unregulated monopoly.
C. regulated pricing always conflicts with the "due process" provision of the Constitution.
D. the regulated price that achieves allocative efficiency is also likely to result in losses.
Answer: D
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The demand for reserves is __________ related to the federal funds rate because banks __________ their excess reserves as the federal funds rate falls
A) inversely; increase B) inversely; decrease C) positively; increase D) positively; decrease
Planned investment spending ________
A) is equal to planned fixed investment spending plus government investment B) is unrelated to the real interest rate C) is heavily influenced by expectations about the future D) all of the above E) none of the above
The income of consumers increases. and the wage rate in the DVD industry increases. As a result
A) the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply. B) the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply. C) the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply. D) the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.
The key issue in determining the relevant product market is
A. the market share test. B. the production processes used to produce the goods. C. the degree of interchangeability between products. D. the specific geographic area in which competing products overlap.