The Acme Oil Company is a vertically integrated firm. It explores for and extracts crude oil. It also refines the crude oil into gasoline and other products, and sells these products to consumers
The internal price that Acme Oil uses when the crude oil that it extracts is "sold" to one of its refineries is called: A) the shadow price.
B) the transfer price.
C) the market price.
D) the non-market price.
E) none of the above
B
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The additional cost to a producer of hiring an additional unit of labor is called the marginal cost
Indicate whether the statement is true or false
For the money expansion process to produce the maximum potential multiplier effect
A) all loans of a given bank have to be deposited in that bank. B) the Fed has to sell government bonds to back up the loans. C) the required reserve ratio has to be 100 percent. D) all loans from banks have to be redeposited throughout the banking system.
Although advertising raises the price of a monopolistic competitor's product, it does confer a benefit to consumers. Which of the following is a benefit to consumers?
A) Advertised products tend to be of higher quality so consumers feel special when they consume advertised products. B) Advertising engenders brand loyalty. C) Advertising could provide consumers with useful information about new products and enable them to comparison shop. D) Advertising acts as a barrier to entry.
Suppose the banking system as a whole has $600 billion in deposits and $66 billion in reserves, with a reserve ratio of 11 percent. What happens to the stock of money if the Fed lowers reserve requirements by changing the reserve ratio to 10 percent?