Two firms engage in Bertrand competition in differentiated products. After doing all the appropriate calculations, you find the best-response functions are PB = 2.5 + .15PC and PC = 1.5 + .075PB. Without doing any further calculations, can you determine the relationship between their Nash equilibrium prices?
a. Yes, PB > PC
b. Yes, PC > PB
c. Yes, PB = PC
d. No; it cannot be determined.
a
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In the income-expenditure model, inventories are:
A. constantly changing and provide insight into the future of the economy. B. a long-run event that aids forecasters in understanding where long-run real GDP is. C. fixed and therefore provide little insight into the direction of the economy. D. often positive, suggesting that additions to inventory stocks are a long-run goal.
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus?
A) $1.00 B) $2.00 C) $3.00 D) $7.00
If a customs union leads to a large amount of trade creation relative to trade diversion, it may be beneficial to world welfare
Indicate whether the statement is true or false