Describe the functions of money
The three main functions of money are to serve (1) as a measure of value, (2) a store of value, and (3) a
medium of exchange. As a measure of value, we use money to indicate the relative value of different
goods. As a store of value, we use money to store purchasing power for future use. As a medium of
exchange, we use money to overcome the lack of a double coincidence of wants.
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If the marginal cost for Dinky's Donuts to advertise one additional day each week in the local newspaper is $200, then Dinky's Donuts should advertize that additional day
A) until the marginal benefit the company receives reaches zero. B) as long as the marginal benefit the company receives each week is just equal to or greater than $200. C) as long as the weekly marginal cost does not rise. D) only if the marginal benefit the company receives each week is greater than $200 plus an acceptable profit margin.
Collusion between two firms occurs when
A) announce that each will match its rival's market price. B) firms explicitly or implicitly agree to adopt a uniform business strategy. C) the firms independently pursue strategies that could hurt each other. D) firms act altruistically to bring about the economically efficient outcome.