Wendy's must decide whether to grow its own potatoes for French fries. Growing potatoes is a very different process from running a fast-food restaurant. Based on this information alone, should Wendy's grow its own potatoes?
a. No, because Wendy's managers have bounded rationality.
b. Yes, because Wendy's managers have bounded rationality.
c. No, because there is a small number of potato suppliers.
d. Yes, because there is a small number of potato suppliers.
e. No, because it is easy to observe the quality of potatoes.
A
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A firm facing a horizontal demand curve
A. cannot affect the price it receives for its output. B. always produces at an output at which P = MR. C. faces perfectly elastic demand for its product. D. All of the responses are correct.
When variable A rises by 10 units, variable B rises by 15 units. The slope of the line describing this relationship is
a. always 2/3. b. either 2/3 or 1.5, depending on which variable goes on which axis of the graph. c. either 1.5 or ?1.5, depending on which variable goes on which axis. d. always ?1.5.
If Sally Smith creates VCU1 by playing an online game, the effect is to cause the nation's:
a. Monetary base to remain the same. b. M2 money supply to fall. c. M2 money multiplier to fall. d. Monetary base to rise.
Foreign governments are holding fewer dollars as reserves. As a result, the value of the dollar is declining. If foreign governments want to keep the U.S. dollar from declining, they could:
A. implement domestic export subsidies to accumulate dollars. B. implement domestic contractionary monetary policies. C. reduce their U.S. dollar holdings even more. D. buy more U.S. dollars.