Which of the following statements about price wars is true?
A.
Firms that have to deal with the possibility of price wars often have extremely flexible prices.
B.
Firms that do not have to deal with the possibility of price wars often have sticky prices.
C.
Price wars tend to increase the short-run flexibility of prices.
D.
Firms that have to deal with the possibility of price wars often have sticky prices.
D.
Firms that have to deal with the possibility of price wars often have sticky prices
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If the forward exchange rate of the yen in terms of dollars is greater than the spot exchange rate,
A) Japanese interest rates must be higher than U.S. interest rates. B) U.S. interest rates must be higher than Japanese interest rates. C) market participants must be expecting the dollar to appreciate against the yen. D) market participants must be expecting the dollar to depreciate against the yen.
Bill uses his entire budget to purchase Pepsi and hamburgers, and he currently purchases no Pepsi and 6 hamburgers per week
The price of Pepsi is $1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 2, and his marginal utility from hamburgers is 6. Is Bill's current consumption decision optimal? A) No, he should increase Pepsi consumption and reduce hamburger consumption. B) No, he should purchase more of both goods. C) Yes, the corner solution is best because his MRS is less than the price ratio. D) We do not have enough information to answer this question.