In order to achieve market power, monopolistically competitive firms use
A. their size.
B. strategic behavior.
C. product differentiation.
D. predatory pricing.
Answer: C
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To correct for a negative externality, a government might impose a uniform tax related only to the physical quantity of pollution if
A) the administrative costs are high. B) the cost of ascertaining the actual economic costs are relatively small. C) the economic damages are zero. D) the economic damages associated with the pollution are different across different locations.
An individual faces two alternatives for an investment: Asset A has the following probability return schedule:Probability of returnReturn (Yield) %.2511.0.2010.5.209.5.159.0.106.5.10-1.0Asset B has a certain return of 8.0%. If the individual selects asset A does she violate the principle of risk aversion? Explain.
What will be an ideal response?
Fiscal policy involves the actions of
A. business regulation to increase economic efficiency. B. changing the exchange rate to discourage imports. C. taxation and spending in an effort to address inflation and unemployment. D. changing interest rates to stimulate private savings.
Specialization of labor makes sense only if there is some means of exchange.
Answer the following statement true (T) or false (F)