The above figure shows the market for gasoline. When a hurricane destroys a major refinery that refines oil into gasoline, the
A) demand curve for gasoline shifts from D1 to D2 and the supply curve of gasoline does not shift.
B) demand curve for gasoline shifts from D1 to D2 and the supply curve of gasoline shifts from S2 to S1.
C) demand curve for gasoline does not shift, and the supply curve of gasoline shifts from S2 to S1.
D) demand curve for gasoline does not shift, and the supply curve of gasoline shifts from S1 to S2.
C
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Why may equity finance be preferred to debt finance for developing countries?
A) A fall in domestic income automatically reduces the earnings of foreign shareholders without violating any loan agreement. B) There are laws insuring against any default with equity finance. C) The risk is shared between debtor and creditor with debt finance. D) The tax structure leaves equity finance unconstrained. E) Repayments are unaffected by falls in real income.
In a perfectly competitive market, producers:
A. are able to sell as much as they want without affecting the market price. B. can influence the price upward by restricting output. C. often undercut the competition's price and force firms to leave the market. D. None of these is true of perfectly competitive markets.