The substitution effect is thought to dominate the behavior of low-wage workers
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose water rates in Podunk rise by 100%. The water consumption in Podunk will tend to
A) remain unchanged, because water is a necessity of life. B) decrease substantially overnight. C) decrease more substantially over time, as residents discover substitutes for water. D) decrease, and therefore lead to a lower price of water.
__________ are most likely to raise the eyebrows of antitrust officials while ______ are not
a. Price discriminators; predatory pricers b. Conglomerate mergers; vertical mergers c. Horizontal mergers; conglomerate mergers d. Low Herfindahl-Hirschman indices; high Herfindahl-Hirschman indices e. Patent sales; patent purchases
If the self-correcting mechanism operates quickly,
a. direct intervention is less necessary to close a recessionary gap. b. fiscal stimulus is far more useful in closing a recessionary gap than monetary policy. c. monetary policy is far more useful in closing a recessionary gap than fiscal policy. d. fiscal stimulus is ineffective and inflation will occur.
Assume you pay a premium of $0.80/bu for a put option with a strike price of $6.00/bu and that the current futures price is $5.50/bu. Then, the option is in-the-money by:
A. $0.00/bu since there is no intrinsic value in this put option B. $0.30/bu C. $0.50/bu D. $0.80/bu