The industry elasticity of demand for gadgets is ?2, while the elasticity of demand for an individual gadget manufacturer's product is ?10. Based on the Rothschild approach to measuring market power, we conclude that:
A. there is significant monopoly power in this industry.
B. there is no monopoly power in this industry.
C. the Herfindahl index for this industry is 5.
D. the Herfindahl index for this industry is 0.2.
Answer: B
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The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month. Many new Web design firms now enter the market. As a result,
A) the supply of Web pages increases and the price falls. B) the supply curve of Web pages shifts leftward and the price falls. C) the demand for Web pages increases and the price rises. D) the supply of web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward. E) the demand for Web pages increases and the price falls.
In the figure above, the ________ gap is equal to ________
A) recessionary; $1 trillion B) inflationary; $1 trillion C) recessionary; $12 trillion D) inflationary; $12 trillion E) recessionary; $13 trillion
Illustrate the effectiveness of monetary policy with fixed exchange rates
What will be an ideal response?
If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in
a. foreign portfolio investment. b. foreign financial investment. c. foreign direct investment. d. indirect foreign investment.