The rate at which a consumer is willing to substitute one good for another, while still maintaining a given level of satisfaction, is called the
A. budget constraint.
B. average rate of substitution.
C. marginal rate of substitution.
D. market rate of substitution.
Answer: C
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Which of the following will happen if a new firm enters in an oligopoly with differentiated products?
A) Market price will fall. B) Market price will rise. C) Existing firms will gain market share. D) Each firm will have an equal market share.
If a Cournot duopolist announced that it will double its output,
A) it becomes the leader. B) the other firm does not view the announcement as credible. C) the other firm will shut down. D) the other firm will double output also.
Which of the following is not a characteristic of a competitive market?
a. Buyers and sellers are price takers. b. Each firm sells a virtually identical product. c. Entry is limited. d. Each firm chooses an output level that maximizes profits.
The Fed's low short-term interest rate policy of 2002 to 2004 encouraged decision makers to
A) make large down payments when purchasing housing. B) borrow more and increase their purchases of housing. C) borrow less and reduce their purchases of housing. D) purchase housing only if it could be financed with a 30-year, fixed interest-rate mortgage.