The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia is 1,200 markas while in the U.S. it is $1,000. The real exchange rate is

Under which of the following circumstances is the principal-agent problem likely to be most serious

a. Between general practitioners and patients. b. Between surgeons and patients. c. Between hospitals and nurses. d. Between dentists and physicians. e. Between physicians and lawyers.

In an economy where nominal incomes adjust equally to changes in the price level, we would expect the long-run aggregate supply curve to be: a. vertical

b. horizontal. c. unit elastic. d. negatively sloped. e. positively sloped.

Which of the following is true of the model of monopolistic competition?

a. Barriers to entry enable firms to enjoy positive profits in the long run. b. The number of firms declines over time as a result of economies of scale. c. The monopolistically competitive firms enjoy a greater market power than a monopolist. d. Firms tend to locate near each other in order to minimize total travel costs for consumers. e. The firms end up charging same prices for their individual products.

If the market is unable to allocate resources then

A) there is market failure. B) there is rent-seeking. C) there are no free-riders. D) none of these choices.