The 'Invisible Hand'
What will be an ideal response?
In markets buyers and sellers acting in their own best interests respond to price incentives (or signals)
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A higher saving rate will promote capital deepening
Indicate whether the statement is true or false
If a firm is able to convert every dollar of consumer surplus to economic profit, the firm has achieved
A) discrimination among units of a good. B) discrimination between groups of buyers. C) perfect price discrimination. D) perfect cost minimization. E) the normal amount of economic profit.
If required reserves are expressed by RR; the required reserve rate by rD and deposits by D, the simple deposit expansion multiplier is expressed as:
A. 1/rD. B. RR × D. C. RD × D. D. (1/rD ) D.
Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4Suppose Island Bikes knows that customers whose reservation prices are at least $10 always rent bikes before noon, while those whose reservation prices are below $10 never do so. If Island Bikes charges a different price in the morning and in the afternoon, then what will be its daily economic profit?
A. $33 B. $32 C. $27 D. $39