Suppose iPhones cost 180 euros and 240 dollars in Belgium and the United States, respectively, while binoculars cost 60 euros and 75 dollars in Belgium and the United States, respectively
If the exchange rate is 0.75 euros/dollar, the law of one price ________ for iPhones and ________ for binoculars.
A) holds; holds B) does not hold; holds
C) does not hold; does not hold D) holds; does not hold
D
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The Sherman Act makes it illegal to
A) increase market share. B) merge firms in the same industry. C) attempt to monopolize an industry. D) price below competitors.
Which of the following statements is true?
A) The supply of oil is perfectly inelastic; therefore, as the demand for oil increases over time the price of oil increases significantly. B) The supply of oil is very inelastic over short time periods but becomes more elastic over time. A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. C) Over short periods of time increases in the demand for oil are greater than increases in the supply of oil. Over the long run increases in the demand and the supply of oil are about equal. As a result, the price of oil increases greatly in the short run but is stable in the long run. D) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time. A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic.
If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay
a. variable cost but not fixed cost b. no costs at all c. variable cost and fixed cost d. only variable cost e. only fixed cost
An inflationary output gap is defined to be when the current level of output is:
A. below full employment GDP. B. above full employment GDP. C. equivalent to full employment GDP. D. high enough to cause an unexpected amount of inflation.