Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?
A) Restaurants compete in small market areas—neighborhoods and cities—rather than in regional or national markets. Therefore, restaurants are not small relative to their market size.
B) Restaurants usually have entry barriers in the form of zoning restrictions and health regulations.
C) Restaurants do not sell identical products.
D) Restaurants have significant liability costs that perfectly competitive firms do not have; for example, customers may sue if they suffer from food poisoning.
C
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The exchange rate is the:
a) cost of borrowing money. b) interest rate that banks charge their best customers. c) rate at which one currency can be exchanged for another. d) amount of gold backing a U.S. dollar.
If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $25.5 million worth of bonds to the public, bank reserves
a. increase by $25.5 million and the money supply eventually increases by $382.5 million. b. increase by $25.5 million and the money supply eventually increases by $170 million. c. decrease by $25.5 million and the money supply eventually decreases by $382.5 million. d. decrease by $25.5 million and the money supply eventually decreases by $170 million.