The kinked demand curve model is based on the assumption that rival firms will match a price cut but ignore a price increase
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose that a firm in an industry subject to diminishing returns to scale is initially in long run equilibrium. Which of the following will not be part of the industry adjustment process to a permanent increase in demand? a. Some firms will temporarily make economic profits
b. Some new firms will enter. c. The long run equilibrium price will be higher than the initial equilibrium price. d. All of the above will be consequences.
Assume that Country X and Country Y are trading partners and the exchange rates are fixed. If prices in Country Y rise, all of the following are expected to happen except
a. Country X will export more. b. Country Y will import more. c. Net exports will rise for Country X. d. Trade will boost Country Y GDP.
The present value of a future payment to be received in three years is $1,000 . If the interest rate is 5%, what is the amount that will be paid in three years?
a. $1,150.00 b. $1,157.63 c. $1,215.51 d. $1,250.00
Tax distortions happen because tax laws take into consideration only:
A. nominal income. B. real income. C. nominal output. D. real output.