Pizza at Home is a frozen pizza company that supplies several large grocery store chains. The managers of Pizza at Home are currently negotiating a four year contract with Saucy Pizza, a manufacturer of pizza sauce. Saucy Pizza will supply a specified quantity of canned tomato sauce to Pizza at Home over a four year period; however; Pizza at Home can ends its contract with Saucy Pizza at the end
of the first, second, or third years if Saucy Pizza does not supply quality tomato sauce. What can the manager of Pizza at Home do to avoid the end-game problem?
A) Pay Saucy Pizza in full at the end of the third year.
B) Offer a bonus to Saucy Pizza if they provide quality tomato sauce in all four years.
C) Pay Saucy Pizza in equal installments at the end of each of the four years.
D) Pay Saucy Pizza in full at the beginning of the first year.
B) Offer a bonus to Saucy Pizza if they provide quality tomato sauce in all four years.
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A federal budget deficit ________ interest rates, which ________ exchange rates (foreign currency per domestic currency), and ________ the balance of trade
A) reduces; raises; reduces B) raises; reduces; reduces C) reduces; reduces; raises D) raises; raises; reduces
The U.S. unemployment insurance program
A) decreases the level of frictional unemployment. B) pays the unemployed a benefit equal to twice the average wage. C) increases the amount of time the unemployed spend searching for a job. D) eliminates structural unemployment.
An oligopolist decides to lower its price to capture a greater market share. This sets off a price war with its rivals, and the price moves from P 1 to P 2 and so forth. What is the ultimate outcome if this price war continues?
a. The final price equals the ATC, and economic profits become zero.
b. The final price reflects the benefits of collusion between the firms.
c. Without collusion the firms are able to charge a higher price than before.
d. The final price exceeds the ATC, and economic profits are earned.
The mathematical representation of the satisfaction a consumer derives from a bundle of goods is called the
A) Demand curve. B) Engel curve. C) Utility function. D) Indifference curve.