When a firm shuns other suppliers and chooses to produce an input internally.
A. Contracts
B. Spot exchange
C. Vertical integration
D. Horizontal integration
Answer: C. Vertical integration
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Which of the following statements is FALSE concerning monopolistic competition?
A) There are many firms. B) Firms sell a differentiated product. C) Each firm's actions influence rival firms. D) Firms are free to enter and exit.
By acting as a lender of last resort during a banking panic, a central bank allows commercial banks to
A) encourage the public to borrow directly from the central bank, taking pressure of the banking system. B) satisfy customer withdrawal needs and eventually restore the public's faith in the banking system. C) call in their loans to their customers and eventually restore the public's faith in the banking system. D) make additional loans to increase the assets on their balance sheets.
Economic growth can be depicted as a
A) shift in the contract curve. B) a change in the dimensions of the Edgeworth box. C) a change in the preference curves of individuals. D) a change in the number of people in the Edgeworth box.
Fair insurance is a contract between an insurer and a policyholder in which
A) the value of the contract to the policyholder is negative. B) the value of the contract to the policyholder is zero. C) the risk of the contract to the policyholder is diversifiable. D) the value of the contract to the policyholder is positive.