In a competitive free market:
A) all exchanges take place involuntarily.
B) there is only one seller and many buyers.
C) the government does not impose price controls.
D) there is no provision for the protection of property rights.
C
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This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.Given the dominant strategy of MiiTunes according to the figure, we can predict that The Rock Shop:
A. Their actions cannot be predicted because they do not have a dominant strategy. B. will enter and lose $2 million. C. will enter and enjoy profits of $4 million. D. will not enter and earn $0.
Diminishing returns begin to occur when the
A. marginal product curve intersects the average product curve. B. slope of the ray from the origin reaches a maximum. C. slope of the total product curve reaches a maximum. D. total product curve reaches a maximum.
The GATT prohibits quotas. Why didn't the United States or other countries try to stop the voluntary export restraint on automobiles implemented by the Japanese during the early 1980s?
a. At the time, the GATT did not prohibit quotas administered by the exporting country, that is, voluntary export restraints. b. Other countries did try to stop the voluntary export restraints but were unsuccessful in their efforts. c. The GATT only prohibited quotas after the WTO was established in 1995. d. The GATT only prohibits developing countries from using quotas.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease