If a price is demand determined, then
A. the demand curve must be upward sloping.
B. the demand curve must be vertical.
C. the supply curve must be vertical.
D. the supply curve must be horizontal.
Answer: C
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In 2008, a former Intel engineer has been charged with stealing trade secrets worth $1 billion. Intel owns 90 percent of the worldwide market for microprocessors, AMD has the rest
Conducting R&D is very expensive so suppose that each of these firms can either steal R&D or develop their own R&D. If both firms develop their own R&D, economic profit will be $50 million each. If one company steals R&D, that firm earns $100 million in economic profit while the other firm earns $10 million. If both firms steal R&D, each firm breaks even. What is NOT true about this game? A) The outcome will not be a dominant strategy equilibrium. B) A strategy is to steal R&D. C) A firm will make more profit if it steals R&D. D) A strategy is to conduct R&D.
Given that real interest rates are constant, an increase in the expected rate of inflation will tend to
A) decrease the nominal rate of interest. B) increase the nominal rate of interest. C) cause lower inflation rates. D) cause no change in the nominal rate of interest.
Many borrowers defaulted on subprime mortgages ultimately disrupting financial markets by August 2007. Which of the following is a likely result of this increase in financial frictions?
A) The AD curve likely shifted left which caused a positive inflation gap. B) The AD curve likely shifted right which caused a positive inflation gap. C) The AD curve likely shifted left which caused an upward movement along the MP curve to a higher general equilibrium interest rate. D) The AD curve likely did not shift. E) none of the above
People respond to incentives
A) by ignoring negative incentives and responding to positive incentives only. B) only when they are irrational. C) as they never intentionally make decisions that would leave them worse off. D) when they have low incomes.