Why do competitive firms enter the market in spite of the price war threatened by the dominant firm?
The new firms are usually forward looking. They are aware of the fact that if they actually open up for business the dominant firm's best strategy would be to accommodate them rather than sacrifice profits in hopes of bankrupting them.
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"The minimum wage should be increased so that low-income workers can afford to feed their families." This is an example of: a. a positive economic statement
b. a negative economic statement. c. the fallacy of composition. d. a normative economic statement.
Raising the interest paid on reserves has the effect of making it:
A. More costly for banks to hold excess reserves B. Less costly for banks to hold excess reserves C. More attractive for banks to lend out their excess reserves D. Less attractive for banks to hold required reserves