If demand is represented as Qd = 24 - P and supply is represented as Qs = 6 + 2P, the equilibrium price is
A. $3.
B. $6.
C. $10.
D. $18.
Answer: B
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The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 4 pounds of cookies, to maximize its profit it will
A) increase its output. B) decrease its output. C) continue producing 4 pounds of cookies. D) shut down.
Which of the following statements is the MOST accurate? The law of one price states
A) in competitive markets free of transportation costs and official barriers to trade, identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency. B) in competitive markets free of transportation costs and official barrier to trade, identical goods sold in the same country must sell for the same price when their prices are expressed in terms of the same currency. C) in competitive markets free of transportation costs and official barrier to trade, identical goods sold in different countries must sell for the same price. D) identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency. E) in competitive markets free of official barrier to trade, identical goods are sold at the same price regardless of transportation costs.
The case of production with a single variable input is analogous to
a. changing the use of land, labor, and capital in production by a constant absolute amount. b. a controlled laboratory experiment in which the scientist permits one variable to change at a time. c. changing the use of land, labor, and capital in production by a constant percentage. d. specialization in one particular product by a company.
Suppose the nominal yield during the next two years was expected to remain at 10%, but the yield on a one-year security was 10% and on a two-year security was 12%. Investors would:
a. Borrow for one year, invest for two years, and at the end of the first year, roll over the loan. b. Probably do nothing, because markets are efficient, which means there is no way to arbitrage them. c. Borrow for two years, invest for one year, and then roll over the investment at the end of the first year. d. Borrow for two years and invest for two years, but at the end of the first year, re-borrow and re-invest at the market rate. e. Borrow for one year and invest for one year, but at the end of the first year, re-borrow and re-invest the borrowed funds at the expected rate.