The problem with the strategy of achieving credibility through reputation is that
A) reputations are rarely credible.
B) reputations lack any commitment.
C) serious costs may be incurred during the period in which reputation is established.
D) rules always have a lower cost than reputations in maintaining credibility.
C
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How does the economist's measure of profit differ from the accountant's measure?
A) Economists subtract total revenue from total cost; accountants do the opposite. B) Economists subtract total costs from total revenue; accountants do the opposite. C) Economists consider more sources of monetary revenue than accountants do. D) Economists include all opportunity costs, accountants don't. E) There is no difference between the two measures.
Which of the following are characteristics of a proprietorship? I. Single owner II. Limited liability
A) I only B) II only C) both I and II D) neither I nor II
When voluntary exchange takes place, both parties gain from the exchange
Indicate whether the statement is true or false
Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. Before the oil embargo, the price
ceiling on gasoline had no noticeable effect on the market. What is the most likely explanation for this? A) The equilibrium price of gasoline was probably below the price ceiling. B) The demand curve for gasoline in the 1970s was vertical. C) The supply curve for gasoline in the 1970s was vertical. D) The equilibrium price of gasoline was probably above the price ceiling.