Consider the following scenario. Assume the price of gold in London is selling for $1400 an ounce while in New York it is fetching a price of $1450 an ounce
What would an economist say about the efficiency of this market? What would an economist predict about what would happen next?
An economist would argue that this market is currently not efficient. The reason is that there are still profit opportunities to be had. Market participants could buy gold in London and sell it in New York until there is no more incentive to do so, i.e. (when there are no more profit opportunities).
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Indexing reduces the ability for relative price changes to allocate resources where they are more valuable
a. True b. False Indicate whether the statement is true or false
Consumer surplus is
A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay. B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item.