The actual real interest rate and the expected real interest rate will be identical if
A) pe = p.
B) pe > p.
C) pe < p.
D) none of the above
A
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A major difference between a monopoly and perfect competition is that monopolies can earn an economic profit in the long run and a perfectly competitive firm cannot
a. True b. False Indicate whether the statement is true or false
Refer to the budget line shown in the diagram. If the consumer's money income is $20, which of the following combinations of goods is unattainable?
A. 4 units of C and 6 units of D.
B. 5 units of C and no units of D.
C. 1 unit of C and 8 units of D.
D. 2 units of C and 6 units of D.
A tax imposed on a good can:
A. prevent the market from reaching an efficient equilibrium. B. encourage production of the good. C. discourage consumption of the good. D. increase the supply of complementary goods.
Holmstrom and Tirole note "The economist's first instinct is to set transfer price equal to marginal cost." However, a distinct plurality of companies uses the full-cost method. That is because:
A. it is simple and has a low cost of implementation. B. it is identical to using a marginal cost approach to transfer prices. C. the results are much better in the field with full-cost method. D. most companies do not employ economists.