Unlike consumption, which is fairly stable over time, investment is subject to erratic fluctuations
Indicate whether the statement is true or false
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There are two firms in an industry and their products are perfect substitutes for each other. Each firm had a market share of 50% and charged equal prices
However, when the demand for the good declined due to a recession, Firm A lowered its price to increase sales. Firm B responded by lowering its price further. This is an example of the ________ of oligopoly. A) Bertrand model B) Cournot model C) Ricardian model D) Keynesian model
Suppose the demand for large (and therefore high-gasoline consumption) cars decreases sharply during an energy crisis. The most likely market adjustment would be
a. a sharp rise in the price of large cars in the short run as people rush to purchase these vehicles before producers cut back on manufacturing them. b. a moderate increase in short-run prices, followed by a larger long-run price increase as the supply of large cars is depleted. c. lower short-run prices, which will lead to an expansion in the number of large cars sold. d. a decrease in the price of large cars in the short run, leading to a reduction in output, which will moderate the price decline in the long run.
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A. increases. B. initially decreases, then increases. C. decreases. D. initially increases, then decreases.
Given a fixed level of spending, you will maximize utility when the:
A. marginal satisfactions are maximized. B. ratios of the marginal utilities to their prices are equal. C. total satisfaction from both goods is maximized regardless of cost. D. ratios of the total utilities to their prices are equal.