Which of the following does not explain why consumers buy products that many other consumers are already buying?
A) network externalities
B) the satisfaction people derive by being viewed as "fashionable"
C) cost-effective way to gather information about a product
D) differences in tastes and preferences
Answer: D
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If higher inflation ensues from a temporary negative supply shock, and in response, the central bank raises interest rates, then ________
A) it is likely adopting a policy to stabilize inflation in the short run B) short-run inflation will fluctuate around (first go higher then go lower than) the long run level of inflation C) it will need to lower interest rates back to their original values to ensure that inflation returns to its original rate D) all of the above E) none of the above
Fishermen on the East Coast are using lobster traps out of which most of the lobsters that enter can escape. Why?
A) It will make over-fishing less likely. B) They can't come up with better traps. C) They are not educated enough to maximize profit. D) They catch more lobsters this way.