Exhibit 6-1 Refer to Exhibit 6-1. Prices rose by approximately __________ percent from Year 1 to Year 5.
a. 10.6
b. 9.6
c. 14.3
d. 4.5
Answer: a. 10.6
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Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because
A) of fear of adverse selection problems. B) of interest rate ceilings in many states. C) of fear of offending the loan applicants. D) use of credit rationing is encouraged by the Federal Reserve.
Suppose that the market for coffee is in equilibrium at a price of $9.50 per pound and a monthly quantity of 20 million pounds. News of a drought in Brazil arrives so that people know that the supply of coffee months from now will be sharply reduced
What, if anything, will happen in the coffee market now? Explain.
Suppose that two poker players believe that they are superior players to the rest of the people at their table. Further suppose that the two players make an agreement to concede hands to each other in order to drive the other players from the game first. Economists would model such behavior as
a. monopolistic competition. b. game theory. c. predatory pricing. d. a dominant strategy.
Monoploy
What will be an ideal response?