To protect themselves from the effects of inflation, lenders try to estimate the expected rate of inflation
a. True
b. False
Indicate whether the statement is true or false
True
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You view tea and scones as perfect complements, and the corners of the indifference curves lie on the 45-degree line. Tea is plotted along the horizontal axis of the indifference map
Also, at your current point of consumption, you have not fully exhausted the available budget, and you consume more tea than scones. Based on this information, which of the following statements is NOT true? A) The marginal utility of tea equals zero for your current consumption bundle. B) The marginal utility of scones equals zero for your current consumption bundle. C) To reach the point of optimal consumption, you must increase your scone consumption. D) The equal marginal principle does not have to be satisfied at the optimal consumption point for this problem.
Ronny's Pizza House operates in the perfectly competitive local pizza market. If the price of pizza cheese increases (ceteris paribus), what is the expected impact on Ronny's profit-maximizing output decision?
A) Output increases to cover the higher input cost B) Output increases because the marginal cost curve shifts upward C) Output decreases because the marginal cost curve shifts upward D) Output decreases because the price of pizza must also increase
In a perfectly competitive market, producers efficiently use their scarce resources to produce what consumers want and as a result they achieve: a. productive efficiency
b. allocative efficiency. c. economic efficiency. d. constant returns of scale.
Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable. Which of the following is a reason why cartels often
break down? A) Most cartels do not have a dominant strategy. B) When a cartel is profitable, the amount of competition it faces increases. C) Members of a cartel may resent having to share their profits equally. D) Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement.