Mail-order sales of wine are illegal in some states. Some wineries argue that the ability to ship directly to consumers helps small wineries and that shipping bans unfairly protect home-state wineries, raising prices to consumers. Others argue that the bans allow states to collect tax revenues and to keep wine from being sold to minors. Economists looking at this case would say that one effect of the ban is to prevent:
A. reverse engineering.
B. competition to existing sellers.
C. a winner-takes-all market.
D. a network externality.
Answer: B
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A) money market conditions; countercyclical B) money market conditions; procyclical C) monetary aggregates; countercyclical D) monetary aggregates; procyclical
A . When the United States experienced double-digit inflation rates in the 1970s, people routinely bought houses that were more expensive than they could easily afford. Explain their behavior. b. Mortgage companies responded to this behavior, in part, by offering variable rate mortgages, where the interest rate for the loan varies with the inflation rate. Explain their behavior
In the short run, a profit-maximizing firm in a price-taker market will definitely stop production if
a. economic profit is zero. b. price falls below average total cost. c. price is less than average variable cost. d. it cannot completely cover its fixed costs.
Assume the price of Nikes decreases. As a result, consumers increase the quantity of Nikes purchased each year and purchase fewer Reeboks. This is an example of the:
A. substitution effect. B. income effect. C. utility effect. D. consumption effect.