Gretchen is a writer who works from her home. Gretchen lives next door to Randall, the trumpet player for a local band. Randall needs lots of practice to earn his share of the band's profit, which will amount to $350 . Gretchen gets distracted by Randall's trumpet playing but she needs to get her writing done to earn $570 for her current article. If Randall owns the right to play his music and
Gretchen needs to hire a lawyer to help her reach an agreement with Randall, then what price is Gretchen willing to pay the lawyer?
a. less than $220
b. less than $350
c. less than $570
d. less than $920
a
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The rational expectations hypothesis is a theory that states that
A) people make their economic plans by using all available past and present information and their understanding about how the economy operates. B) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation. C) people make their economic plans in an irrational, intuitive manner. D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
A cost-justified precaution is a safety measure whose
A) benefits outweigh its costs. B) costs outweigh its benefits. C) costs equal its benefits. D) costs are zero.
Product differentiation and internal economies of scale yield gains from trade in the form of
A) lower production costs and a greater variety of goods. B) higher profits and lower trade costs. C) the proximity-concentration effect. D) a proliferation of competitive firms. E) the substitution of immigration for foreign direct investment.
Suppose University Bank has zero excess reserves. If the required reserve ratio decreases, the
A. Bank's assets will increase. B. Money multiplier will decrease. C. Bank will be able to make more loans. D. Bank will not have enough required reserves.