Explain the difference between the words "value," "price," and "cost."
What will be an ideal response?
Value refers to the marginal benefit of consuming one more unit of a good and is illustrated by the demand curve.
Price is determined in the market by the forces of supply and demand. Price is what the supplier receives for selling a good and is what the buyer pays when purchasing a good.
Cost refers to what must be given up to produce a good. The marginal cost of producing one more unit of a good is illustrated by the supply curve.
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Refer to Figure 2-12. Which country has a comparative advantage in the production of milk?
A) They have equal productive abilities. B) Bora Bora C) Tahiti D) neither country
An increase in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________, everything else held constant
A) right; appreciate B) right; depreciate C) left; appreciate D) left; depreciate
Which policy measure bans spinning?
A) Sarbanes-Oxley Act of 2002 B) Global Legal Settlement of 2002 C) Gramm-Leach-Bliley Act of 1999 D) Riegle-Neal Act of 1994
A perfect market would have all but which of the following characteristics?
A) Infinitely divisible securities B) Asymmetric information C) Buyers and sellers of financial instruments would know the true quality of what they are buying and selling. D) Buyers and sellers could transact with each other without cost (no transactions costs).