In a Bertrand duopoly with product differentiation, explain how a change in one firm's marginal cost can have an effect on the price charged by the other firm
What will be an ideal response?
Each firm's price is a function of the other firm's price. If one incurs an increase in marginal cost, it raises its price. This, in turn, causes the other firm to raise its price.
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Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?
A) People buy bonds, the price of bonds rises and the interest rate rises. B) People buy bonds, the price of bonds falls and the interest rate rises. C) People sell bonds, the price of bonds rises and the interest rate rises. D) People sell bonds, the price of bonds falls and the interest rate rises.
Brazil's 1999 crisis was relatively short lived because
A) Brazil's financial institutions had avoided borrowing all together. B) Brazil's financial institutions had avoided heavy borrowing in local currency. C) Brazil's financial institutions had avoided heavy borrowing in dollars. D) Brazil's financial institutions had extended low-interest loans. E) Brazil's financial institutions had extended high-interest loans.
Military force is most effective _____
a. when a country's army has superior numbers b. when a country's navy is superior c. if it causes the other side to back down d. if it causes the other side to waste resources
Markets provide the efficient amount of a good or service when
a. externalities are present. b. monopoly exists. c. public goods are present. d. competition is present and externalities and public goods are absent.