Prelims Flashcards
Which disequilibrium profit theory is applicable to businesses with high capital requirements?
Monopoly profit theory
This market structure has a lot of competitors selling non-identical goods.
Monopolistic competition
What does a discount rate in the net present value signify?
Firm’s time and risk preference
Why does the value of money diminish over time?
Inflation
How do interest rates affect the value of money?
It makes money more valuable in the future.
True or False
An anticipated decrease in the price of a good will cause suppliers to decrease current supply of the good.
False
True or False
In real-life situations, shifts in demand curve are parallel to each other.
False
True or False
The law of demand states that there is a negative relationship between demand and supply.
False
True or False
An increase in the level of available technology causes a product’s supply to decrease.
False
True or False
A change in the consumer’s income would cause a movement in the demand curve.
False
True or False
A decrease in income would cause a buyer to consumer more inferior goods.
True
True or False
The price floor and price ceiling are both imposed by the government.
True
True or False
A surplus occurs if floor price is below equilibrium price.
True
True or False
Two (2) goods are substitutes if an increase in the price of the first good causes an increase in supply of the second good.
True
True or False
If a customer expects a good’s price to be higher in the future, there will be a higher demand for the good now.
True
