Refer to the scenario above. What is the optimal strategy of each bidder?
A) Each bidder should bid up to his/her maximum willingness to pay for the necklace.
B) Each bidder should bid above his/her maximum willingness to pay for the necklace.
C) Each bidder should bid up to 9/10 of his/her valuation of the necklace.
D) Each bidder should bid up to 4/5 of his/her valuation of the necklace.
C
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The market for maple syrup is perfectly competitive. Suppose that the market is in long-run equilibrium when the market demand for maple syrup increases. After the demand increases, a typical firm will
A) make zero economic profit. B) make an economic profit. C) incur an economic loss. D) exit the market.
If a forecast is made using all available information, then economists say that the expectation formation is
A) rational. B) irrational. C) adaptive. D) reasonable.
If the government increases spending but does not raise taxes
A) aggregate demand will increase without any effect on the price level. B) borrowing by the government will take place. C) the government will have to sell some assets, such as oil and national parks. D) the government will have to either lower expenditures or raise taxes the next year.
Broad-based taxes are less likely to be shifted than partial taxes are.
Answer the following statement true (T) or false (F)