Network externalities:
A. can explain why more efficient technologies displace less efficient technologies.
B. can explain why technological lock-in no longer occurs.
C. can explain why the economy fails to adopt the most efficient technologies.
D. reduce the cost of switching to new technologies without network externalities.
Answer: C
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The current spot exchange rate is $1.14/euro. The current 90-day forward exchange rate is $1.11/euro. How could a U.S firm, which must repay a 40 million euro loan in 90 days, use a forward exchange contract to hedge its risk exposure?
What will be an ideal response?
Which of the following statements accurately describes the situation shown?
a. The short-run equilibrium differs from the long-run equilibrium at full employment.
b. The economy is in a recession.
c. The actual real GDP is the same as the potential real GDP at full employment.
d. The economy is experiencing stagflation.
The recurrent ups and downs in the level of economic activity extending over several years are a description of a:
A. recession. B. business cycle. C. business trough. D. noncyclical fluctuation.
Value maximization leads to predictable resource misallocation when the firm:
A. buys inputs from a monopsonist. B. has monopoly power in the market. C. sets price below long-run marginal cost. D. operates in a competitive market.