Input prices rise as entry occurs in an constant-cost industry.
Answer the following statement true (T) or false (F)
False
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Consider the currency market for British pounds and U.S. dollars. A decrease in the supply of British pounds results in a(n) ________ of the pound and a(n) ________ of the dollar.
A. appreciation; depreciation B. appreciation; appreciation C. depreciation; depreciation D. depreciation; appreciation
Moral hazard is an important concern of insurance arrangements because the existence of insurance
A) provides increased incentives for risk taking. B) is a hindrance to efficient risk taking. C) causes the private cost of the insured activity to increase. D) creates an adverse selection problem but no moral hazard problem.
Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is
A) a violation of the law of demand since fewer HDTVs should be purchased at a higher price. B) a violation of the law of demand since more HDTVs should have been purchased with higher incomes. C) not a violation of the law of demand since the relative price of HDTVs did not change. D) not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs.
What are the earnings of a resource with a perfectly elastic supply curve called?
a. Transfer earnings b. Dividends c. Economic rent d. Capital gain e. Interest