A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only.
B. aggregate demand curve only.
C. aggregate demand curve, and the short-run aggregate supply curve would shift in response.
D. short-run aggregate supply curve and the long-run aggregate supply curve.
Answer: A
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In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties, all of the following are credibility-enhancing mechanisms except
a. establishing a bond forfeited by violating the commitment b. investing in a non-redeployable reputational asset tied to the promise or threat c. interrupting the communication of negotiated compromises d. offering a warranty e. delivering a hostage (e.g., a patent license triggered by violating the promise)
Cartels are inherently unstable
a. True b. False
The elasticity of supply is defined as the ________ change in quantity supplied divided by the _______ change in price.
a. total; percentage b. percentage; marginal c. marginal; percentage d. percentage; percentage
In order for insurance companies to generate predictable payout, they need to:
A. spread the risk across many policies. B. accept policyholders from a very specific geographic area. C. offer only life insurance. D. focus on insuring only specific events, for example only fire.