Which of the following is not a characteristic of a perfectly competitive market?
a. There are many buyers and sellers.
b. Firms can freely enter and exit the market.
c. Many firms have market power.
d. Firms sell very similar products.
c
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In a typical cartel agreement, the cartel maximizes profit when it
a. behaves as a monopolist. b. behaves as a duopolist. c. is flexible in enforcing production targets. d. behaves as a perfectly competitive firm.
A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 What will be the total village income if each villager decides how to invest
based on his or her individual self-interest? A. $5 B. $125 C. $25 D. $75
According to the classical economists, an economy producing $10 million in goods and services
A. simultaneously generates the income necessary to purchase $10 million in goods and services. B. could experience a permanent surplus if no one has estimated the demand for goods and services in the economy. C. may be producing too much since the needs of people may not be this great. D. is supplying $10 million in goods and services, but could be demanding more or less than $10 million in goods and services for a very long period of time.
Define the two “pure” types of exchange-rate systems.
What will be an ideal response?