Explain what the Five Forces Model is useful for and identify each of them
What will be an ideal response?
The Five Forces Model is a model that helps economists understand the competitive forces that determine the level of competition and profitability in an industry. Those forces are potential entrants, buyers, suppliers, substitutes and the rivalry among existing firms.
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Which of the following is an exogenous variable in the Three-Sector-Model?
a. Oil prices b. GDP price index c. Real risk-free interest rate d. Quantity of currency per time period e. Real GDP
Suppose that Canadian farmers can grow wheat more cheaply than can U.S. farmers. In the interest of efficiency, what is the desirable outcome?
A) Allow the Canadian farmers to sell their wheat for a lower price. B) Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S. farmers. C) Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. D) Have U.S. citizens boycott Canadian wheat.