Contrast the crisis in Poland and Russia. Explain why the Polish economy has done better?
What will be an ideal response?
By the end of the 1990s, a handful of East European economies including Poland, Hungary, and the Czech Republic had made successful transitions to the entrepreneur order. Not surprisingly each of these countries was geographically close to the European Union (EU) and had a recent tradition, of industrial capitalism, including a body of contract and property law. In regards to Russia, by 1990 the Russia's government was unable to collect taxes or even to enforce basic laws; the country was riddled with corruption and organized crime. That is why the measured output got smaller progressively and the inflation was hard to control, so at the end of the 1990s most Russians were substantially worse off than under the old Soviet regime. As we can see, Poland's economy started producing more money to growth and decrease inflation because they were having business with potential firms.
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Refer to Figure 14-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?
A) Yes, it will drive BMW out of the market. B) No, it should keep the same price and work to capitalize on its brand loyalty. C) In terms of profit earned, it makes no difference whether Lexus lowers its price or not; in either case it will make $280 million profit if BMW enters. D) No, because BMW will enter the market regardless of Lexus' decision about its price.
If Max experiences a decrease in his income, then we would expect Max's demand for
a. each good he purchases to remain unchanged. b. normal goods to decrease. c. luxury goods to increase. d. inferior goods to decrease.