Financial Innovation More and more of the back office tasks for commodity traders and market makers can be easily automated which lowers the costs of making transactions. What is the effect of these technical changes on the bid-ask spreads between commodity buyers and sellers at commodity exchanges?
The cost of making a market falls. This means a market maker can complete a transaction at lower cost making an existing spread more profitable. He can increase the number of transactions he completes by lowering the spread. Moreover, if he does not lower the spread, traders may seek out a different market maker offering better terms. Therefore, the bid-ask spread within the market will succumb to price pressure and shift lower.
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The perfectly competitive firm's short-run supply curve is the same as the
a. supply curve of all other firms in the industry b. upward-sloping portion of its marginal cost curve c. upward-sloping portion of its marginal cost curve at or above minimum average variable cost d. upward-sloping portion of its average variable cost curve e. market demand curve
If the economy has an inflationary GDP gap, one possible solution is to increase taxes.
Answer the following statement true (T) or false (F)