Why might it make sense to avoid paying for extended warranties on televisions and other small home appliances?
What will be an ideal response?
It usually does not make sense to buy extended warranties. A warranty is like an insurance policy; if you buy a warranty you are insuring against the possibility the appliance will break. In most cases the cost of the warranty is much higher than the expected value of the losses.
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China began pegging its currency, the yuan, to the U.S. dollar in 1994. Because the yuan has been ________ at the pegged exchange rate, the Chinese government ________ its reserves of U.S. dollars as the government purchased more ________ to maintain the pegged exchange rate.
A) undervalued; increased; dollars B) undervalued; decreased; yuan C) overvalued; decreased; yuan D) overvalued; increased; yuan
If firms in a competitive market have different cost functions, then
A) there is no short run market supply curve. B) the market supply curve reflects those firms' operating envelopes, even in the short run. C) some of the firms will shut down because their costs are too high to compete. D) the firms' marginal costs will be different at the market price.