In a perfectly competitive market,
A) firms can freely enter and exit.
B) firms sell a differentiated product.
C) transaction costs are high.
D) All of the above.
A
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? Assume that Figure 4-4 shows demand for soda. An increase in the price of bottled water will change demand from
A. D1to D2. B. D2to D1. C. D3to D2. D. D3to D1.
Credit-driven bubbles ________
A) occur exclusively within the financial sector B) are more likely to be identified by central bank officials than by market participants C) are best contained with a policy of high real interest rates D) are harder to identify than expectations-driven bubbles
Assume that one of two possible outcomes will follow a decision. One outcome yields a $75 payoff and has a probability of 0.3; the other outcome has a $125 payoff and has a probability of 0.7. In this case the expected value is
A) $85. B) $60. C) $110. D) $35.
What causes demand-side inflation? What causes supply-side inflation?
What will be an ideal response?