Suppose a market is currently served by an incumbent firm. If a potential entrant can enter prior to the incumbent firm announcing its output (or price), the incumbent cannot deter entry through its actions.
Answer the following statement true (T) or false (F)
True
Rationale: An incumbent firm can only deter entry if it can take visible action prior to the entrant making the decision of whether or not to pay the fixed entry cost.
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A person's consumption possibilities is defined by the budget line because
A) it marks the boundary between what is affordable and unaffordable. B) it represents the individual's preference for different combinations of goods. C) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. D) all consumers must consume on their budget line.
Index mutual funds purchase shares of stock in those companies which are included in the market based indexes
a. True b. False Indicate whether the statement is true or false
Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?
a. Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor. b. No, the unfunded promises reflect the shortsighted nature of the political process. c. Yes, political representatives generally favor balancing the government budget because this is best for the economy. d. No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected.
If borrowers and lenders expect a higher rate of inflation,
a. nominal interest rates will tend to fall. b. real interest rates will tend to fall. c. nominal interest rates will tend to rise. d. real interest rates will tend to rise.