Developing countries do:
A. compete with one another for foreign investment, and this competition reduces the benefits from foreign investment.
B. not compete with one another for foreign investment, because they have sufficient domestic saving to finance their investment needs.
C. not compete with one another for foreign investment, because they lack the infrastructure to attract it in the first place.
D. compete with one another for foreign investment, but this competition is beneficial to developing countries because it insures a more efficient allocation of resources.
Answer: A
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In the coordination failure model, how is a particular equilibrium attained?
A) The Federal Reserve picks it. B) It depends on total factor productivity shocks. C) It depends on money supply shocks. D) because people expect it to be the equilibrium.
Wendy's must decide whether to grow its own potatoes for French fries. Growing potatoes is a very different process from running a fast-food restaurant. Based on this information alone, should Wendy's grow its own potatoes?
a. No, because Wendy's managers have bounded rationality. b. Yes, because Wendy's managers have bounded rationality. c. No, because there is a small number of potato suppliers. d. Yes, because there is a small number of potato suppliers. e. No, because it is easy to observe the quality of potatoes.
Which statement is true for a profit maximizing monopolist?
A. It will not produce where marginal cost equals marginal revenue. B. It can charge whatever price it wants. C. It can avoid diminishing returns to production. D. It always faces a downward sloping demand curve.
Diminishing returns to capital is a consequence of firms' incentives to use each piece of capital as productively as possible and illustrates the:
A. principle of increasing opportunity costs. B. scarcity principle. C. cost-benefit principle. D. principle of comparative advantage.