The threat of rejection in market transactions:
A. leads to better products for consumers.
B. leads to lower prices for consumers.
C. leads to greater cooperation between buyers and sellers.
D. does all of these.
Answer: D
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Perfect competition is a market structure
A) in which any firm would have serious impediments to entry or exit. B) in which individual buyers and sellers have no effect on the market price. C) resulting from individual firms selling highly differentiated products. D) where there is significant regulation and markets are always efficient.
Logging companies are always more profitable if they are able to harvest more (rather than less) lumber in a month. If you concluded from that fact that the logging industry is more profitable if all of the firms in the industry harvest more, then you would be
A. wrong because causation and correlation are not the same. B. right. C. wrong because firms operate on jealousy. D. wrong and have fallen victim to the fallacy of composition.
Critics of the government's fiscal policies argued that government deficits
A. caused the level of unemployment in the United States to increase during the 1980s. B. were linked to the excess of imports over exports that occurred in the 1980s. C. had directly contributed to a decline in the level of demand in the American economy. D. prevented capital from flowing into the United States.
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 3.3. Which of the following is TRUE?
A) Nigel has both an absolute and comparative advantage in bandana production. B) Nigel has both an absolute and comparative advantage in hair pin production. C) Nigel has neither an absolute nor comparative advantage in hair pin production. D) Nigel has neither an absolute nor a comparative advantage in bandana production.