When Cabbage Patch Dolls were introduced, they were extremely popular at Christmas, and most stores sold out. By the next year, there were plenty still available at Christmas. What happened?
We might conclude that the manufacturer expanded production capacity, but this would not be a totally satisfactory explanation. Between the two periods, competitors developed imitative products to successfully compete with the Cabbage Patch phenomenon. This is what we would expect in a competitive market with differentiated products. Any success in earning an economic profit will be met with imitators.
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The table below shows four alternative techniques for assembling a car. The cost of labor is $20 per hour, and the cost of capital is $10 per hour. Which of the four techniques for assembling a car is economically efficient?
A) T-1 B) T-2 C) T-3 D) T-4
The Fed has the least degree of discretion and the least to do under a policy rule setting
A) the growth rate of money. B) the growth rate of high-powered money. C) the Federal funds rate. D) nominal GDP.