In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods, and Lunardi's. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi's close at 9 pm. Which of the following statements is true?
A) Safeway can ignore the pricing decisions of the other two supermarkets.
B) Safeway is a monopoly all day because it produces a service that has no close substitutes.
C) Safeway has a monopoly at midnight but not during the day.
D) Safeway probably has a higher markup to compensate for its higher cost of production.
C
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Steven Levitt and Chad Syverson compared home sales in which real estate agents are hired by others to sell a home to instances in which an agent sells his or her own home. They found that homes owned by real estate agents sold for 3
7 percent more than other houses and stayed on the market 9.5 days longer, everything else equal. How could moral hazard explain these results?
Refer to Figure 17-6. Which of the following statements about Scheme II is false?
A) It is likely to draw highly productive workers who see the opportunity to increase their wages. B) It allows workers to increase their monthly wage without penalizing those who are content with their monthly wage. C) It is more risky for senior employees. D) It could discourage less productive workers and induce them to leave the firm.
The most effective mechanism for reducing runs on banks is _____
a. the discount rate b. deposit insurance c. the reserve requirement d. open-market operations e. the Federal Reserve note
When the Fed increases or decreases the money supply, these actions are called
a. discounting b. money printing c. moral suasion d. open market operations e. interest payments