Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
A) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity.
B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery.
C) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself.
D) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology.
Answer: D
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If the long-run aggregate supply curve is vertical,
A) the trade-off between unemployment and inflation cannot be permanent. B) the short-run Phillips curve must be vertical. C) the economy stays at the natural rate of inflation in the long run. D) unemployment and inflation are positively related in the long run.
You are given the following information on the macroeconomy:
Consumption: 200 + 0.75Y Investment: 100 + 0.10Y Government Spending 500 Exports 100 Imports 50 + 0.25Y Compute the equilibrium level of income, the size of the multiplier, and the change in equilibrium income for an increase in autonomous consumption of $50 million.
Which of the following has occurred since the North American Free Trade Agreement (NAFTA) took affect in 1994?
a. U.S. trade with both Mexico and Canada has increased. b. Employment in the United States is now slightly lower than before the agreement. c. Employment in the United States is now substantially higher than before the agreement. d. Both a and b are true. e. Both a and c are true.
You hear an economist state the following: "The increase in the money supply will causes price to rise in the long run and will have no effect on output or any other real factors.". This economist is expressing the principle of _____
Fill in the blank(s) with correct word