When companies like Uber and Lyft join the ride-share market, what would we most likely expect to see cab drivers do to their prices?
A. Raise prices and advertise more.
B. Leave their prices the same.
C. Lower prices to stay competitive.
D. Lower prices for a while and then raise them again.
Answer: C
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In any year, nominal GDP divided by the GDP chain price index equals real GDP
a. True b. False Indicate whether the statement is true or false
Monopoly market 1880 Town is a tourist attraction in Midland, SD. Owners of this attraction have collected buildings built between 1880 and 1920, filled them with antique furniture and collectables, and charge admission for tourists to experience history. Because of the exclusivity and location 1880 Town, this tourist attraction enjoys a measure of monopoly power. Suppose you run a tourist attraction similar to 1880 Town. After running some tests with pricing, you have formulated a daily demand schedule for admission as given. In addition to tracking demand at various price levels, you also monitor costs closely.
a) Using the demand schedule provided, find total revenue and marginal revenue at each point.
b) Using total costs, find marginal costs at each point. (Just as marginal revenue is the change in total revenue divided by a change in Q, marginal cost is the change in total cost divided by a change in Q.)
c) How much should you charge for entrance to the tourist attraction and how many visitors do you expect to have?
d) What is profit at this point?
The Paradox of Financial Innovation states that:
a. What once was thought of as a "financial innovation" is really just old wine in a new bottle (i.e., nothing new). b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise. c. Financial innovation is a puzzle (i.e., a paradox) and always will be. d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease). e. If not fully understood by users and regulators, financial instruments that were created to reduce risk can end up increasing them.
Welfare economics is the study of the welfare system
a. True b. False Indicate whether the statement is true or false