The ABC Corporation earned a real rate return of 4.5 percent on an investment. In the economy, the nominal rate of interest was 6 percent and the rate of inflation was 3 percent. We can conclude that
A) the investment was unprofitable.
B) the investment was profitable.
C) the real rate of interest was 9 percent.
D) the real rate of interest was 1.5 percent.
B
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The use of signals in a market economy
a. makes everyone better off, even those people who choose not to obtain the signal. b. prevents the economy from reaching an equilibrium. c. lowers efficiency because the signals waste resources. d. is one way that the principal-agent problem can be avoided.
A change in demand for a resource can be caused by
a. proportion of economic rent in the total earnings of the resource b. opportunity cost of the resource c. price of the resource d. a change in the number of firms producing the final product e. ease with which resources can be put to alternative uses
In the market for eggs, a removal of the price ceiling on eggs results in:
a. an increase in the demand for eggs. b. farmers supplying more eggs to the market. c. consumers demanding a larger quantity of eggs. d. farmers supplying less eggs to the market. e. consumers demanding a smaller quantity of eggs.
A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases, we can expect the price of the good to:
A. rise at first and then fall. B. fall at first and then rise. C. rise and remain at the higher price. D. fall and remain at the lower price.