The Bertrand model of price setting assumes that a firm chooses its price
A) independently of what price other firms charge.
B) subject to what price rival firms are charging.
C) so that joint profits are maximized.
D) without considering the shape of the demand curve.
B
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A rent ceiling
A) increases the quantity of rental units supplied. B) cannot change the market price. C) set above equilibrium price has no effect. D) generally aims at insuring that landlords receive a higher rent than would otherwise be the case.
Banks became more willing to make subprime loans because of:
A. leveraging. B. securitization. C. herd behavior. D. hedging.
Suppose an exhaustible resource can be sold only this period or in the next period. The marginal cost of extraction is constant and equal to $2. The current and next year prices of the resource are $12 and $13, respectively. At what interest rate the owner of the resource will be indifferent between selling it today or in the next period?
A) 5% B) 7.5% C) 10% D) 12.5%
To offset a decreased demand for its currency, a government fixing its exchange rate
A. must decrease the supply of the foreign currency. B. must decrease the supply of its currency. C. must buy gold or some other precious metal. D. must make it illegal to buy its currency.