Which of the following events best exemplifies the concept of signaling?
a. A college student's parents, having learned that their child is short of money, send her a check for $1,000.
b. A new company making high quality bicycles at a reasonable price sends free bikes to reviewers working for bicycle magazines.
c. A grocery store maintains a policy of examining the driver's license of everyone who writes a personal check to purchase his groceries.
d. A university maintains a policy of considering for admission only those students who graduated among the top ten percent of their high school class.
b
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The cycle of increased market demand that leads to ________ and then a(n) ________ in the market supply curve has caused many firms bankruptcy.
A) underexpansion; decrease B) underexpansion; increase C) overexpansion; decrease D) overexpansion; increase
Production of a catheter in the U.S. requires either one skilled worker-day or two unskilled worker-days, while production of the same device in Guatemala, because of its relative lack of transportation and communications infrastructure, requires either three skilled worker-days or four unskilled worker-days. Production of a hammock in the U.S. requires one-fourth skilled worker-day or one-third unskilled worker-day, while production of a hammock in Guatemala requires one-third skilled worker-day or one unskilled worker day. If one hundred unskilled worker-days are moved from producing hammocks to producing catheters in the U.S., while one hundred twenty skilled worker-days are moved from producing catheters to producing hammocks in Guatemala, combined production of the two goods in the
two countries will change by A. no net change in production of the two goods would occur. B. five additional catheters and thirty fewer hammocks. C. thirty additional catheters and five additional hammocks. D. ten additional catheters and sixty additional hammocks.
According to convergence theory, countries that start out poor should initially grow:
A. faster than ones that start out rich, and will eventually surpass their level of income. B. faster than ones that start out rich, but will eventually slow to the same growth rate. C. slower than ones that start out rich, but will eventually grow to the same growth rate. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.
A recession occurs when ________, when ________, or when both of these occur.
A. potential output grows rapidly; actual output equals potential output B. potential output grows rapidly; actual output falls below potential output C. potential output grows slowly; actual output rises above potential output D. potential output grows slowly; actual output falls below potential output