A price war is evidence of a:
a. perfectly competitive market.
b. successful tacit collusion.
c. successful nonprice competition.
d. collapse of tacit collusion.
Ans: d. collapse of tacit collusion.
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Sally is allocating her budget between two goods, A and B. If Sally has used up the budget on a combination of A and B for which MUA/PA exceeds MUB/PB, she can increase total utility by buying
a. more A and less B b. more B and less A c. more A without changing her consumption of B d. less B without changing her consumption of A e. more B and more A
Transactions costs are:
A. the time and energy involved with creating an exchange. B. often cited as a reason why purchasing power parity doesn't hold. C. usually higher when transactions take place internationally. D. All of these statements are true.