When firms engage in tacit collusion, they:
a. meet periodically to establish production quotas.
b. meet periodically to establish a monopoly price.
c. limit production in a way that enhances industry profits.
d. compete on price by undercutting each other.
Ans: c. limit production in a way that enhances industry profits.
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When _____ are ______, it will be difficult to reach a private solution
a. transactions costs; high b. transactions costs; low c. externalities; visible d. externalities, invisible
Scenario 4.5 indicates that grilled cheese sandwiches and hamburgers are:
A) substitutes. B) complements. C) independent goods. D) none of the above
In a state-run lottery, where winners are paid in annual installments
a. the present value of the payments is less than the number of dollars won b. the future value of the winnings is less than the number of dollars won c. the present value of the payments is greater than the number of dollars won d. the winner would prefer the annual installments to a lump sum payment made immediately e. none of the above is correct
A bank can actually create money by
a. lending its required reserves. b. ordering newly printed money from the Fed. c. lending its excess reserves. d. None of these.