Mutual interdependence means that
A) all firms are price takers.
B) each firm sets its own price based on its anticipated reaction by its competitors.
C) all firms collaborate to establish one price.
D) all firms are free to enter or leave the market.
B
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Table 19-1 ? American Coal British Coal Cost per Ton Cost per Ton $150 £75 Assume that the information in Table 19-1 applies to the cost per ton of coal in 1998. Assume that also over a 10-year period prices rise 100 percent in Great Britain and 200 percent in the United States. According to the purchasing power parity theory, the exchange rate between the dollar and the pound in the year 2008 will be
A. 1 dollar = 2 pounds. B. 1 pound = 2 dollars. C. 1 pound = 3 dollars. D. 1 dollar = 3 pounds.
Peter is looking at a graph that shows the relation between inflation and unemployment. It measures the rate of inflation along the y-axis and the rate of unemployment along the x-axis. Peter believes that the graph shown to him is a short-run Phillips curve. Which of the following will strengthen his belief?
a. The points marked on the curves are (6, 4), (6, 3), and (6, 2). b. The points marked on the curves are (5, 4), (6, 4), and (7, 4). c. The points marked on the curves are (5, 4), (6, 3), and (7, 2). d. The points marked on the curves are (5, 4), (6, 5), and (7, 6).
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
A change in the reserve requirement changes
A) the monetary base. B) the money multiplier. C) the discount rate. D) all of the above E) none of the above