Which of the following firms is most likely to spend on innovation?
A) A perfectly competitive firm
B) A monopoly with absolutely no competition
C) A firm that is the only controller of a key resource necessary for production
D) A firm that enjoys some monopolistic power, but faces strong competition from its rivals
D
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Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two goods each month. The price of a book is $15 and the price of going to the movies is also $15. He currently consumes four books and six movies a month. If the price of a book drops to $10, the substitution effect would predict:
A. Ethan would consume more of each good. B. Ethan would consume less of each good. C. Ethan would consume more books and fewer movies. D. Ethan would consume fewer books and more movies.
Ben N. Jerry prefers to keep his $10,000 retirement savings buried in the backyard. After an increase in the price level, Ben reduces the amount of goods and services he wants to purchase. Ben's rationalization, that now his retirement savings won't buy as much, is consistent with which explanation of the aggregate demand curve's negative slope?
a. the interest rate effect b. the open economy effect c. the inflation effect d. the wealth effect
Under Section 2 of the Sherman Act,
a. firms cannot act in ways that increase prices b. contracts between parties are deemed binding c. firms cannot operate in perfectly competitive markets d. firms that earn short-run profits face penalties e. a firm cannot attempt to monopolize an industry
Suppose you sell a $1,000 bond that matures in 1 year for $950. Calculate the interest rate you will have to pay on this bond.
A) 0.95% B) 5.0% C) 5.3% D) 95%