The equation of exchange states:
a. MV = PQ.
b. MP = V/Q.
c. V = M/PQ.
d. MP = VQ.
d
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Which of the following statements regarding patents is false?
A) Patents can help firms gain market power through innovation and then act as a barrier to entry. B) A firm that has market power as a result of a patent may be more likely to innovate than a perfectly competitive firm. C) Patents encourage the production of information, which might otherwise be under supplied. D) Patents can last for an indefinite time period.
In the modern U.S. economy, most transactions are made with
a. cash. b. gold and silver. c. credit cards. d. checking deposits.
Dan owns an autographed copy of a Brittany Spears CD that he values at $100. If he sells the CD at the garage sale he's planning to hold in a few weeks, it will be sold to a buyer with a reservation price of $175. If he sells it on eBay, it will be sold to a buyer with a reservation price of $500. eBay will charge Dan $50 to auction the CD, which just covers eBay's opportunity cost of running the auction. Relative to selling the CD at his garage sale, auctioning the CD on eBay will lead:
A. total economic surplus to increase by $100. B. total economic surplus to increase by $500. C. to no change in total economic surplus. D. total economic surplus to increase by $275.
If the price of Coke rises by 5 percent and the sales of Pepsi go up by 10 percent, we can conclude that
A. Both goods are normal goods. B. Both goods are substitute goods because the cross-price elasticity is +0.5. C. Both goods are substitute goods because the cross-price elasticity is +2. D. The sign on the cross-price elasticity will be negative.