A reserve currency is a currency that is:
a. used exclusively to settle domestic debts.
b. specifically designed for use by commercial banks to settle accounts.
c. held only by bureaucrats.
d. used to settle international debts by private corporations.
e. held by governments to facilitate foreign exchange market interventions.
QUESTION 2You and your friend go out shopping for television sets for your respective apartments. You find the one you want to buy and pay extra money to have it delivered during the weekend. Your friend is unwilling to pay extra and will wait for the television to be delivered as per the store's usual practice. Which of the following conclusions can be drawn from this information?
a. You have a higher price elasticity of demand for the TV than your friend.
b. Your opportunity cost of time is higher and than your friend's.
c. Your friend's opportunity cost of time is higher than your's.
d. Both of you have the same price elasticity of demand for the TV.
QUESTION 3Suppose you inherit the only spring of mineral water in an area and want to maximize profits from this costless product. You would ask your customers to bring their containers with them and:
a. charge them the highest price possible to sell some output.
b. charge them the lowest price possible to sell as much as you can.
c. ask them how much they would like to pay and accept it.
d. charge the price at which MR is zero.
e. charge the price at which MR is maximum.
QUESTION 4Which of the following is false about quantity discounts?
a. Quantity discounts are a form of price discrimination which allow a seller to charge a higher price for the first unit than for later units.
b. Quantity discounts allow price discriminating producers to extract additional consumer surplus from customers.
c. Price discrimination, such as offering quantity discounts, can result in a greater output, and thus greater consumer surplus and producer surplus, by a monopolist than if price discrimination was not possible.
d. Quantity discounts benefit those customers who would not buy any of a monopolist's product at the price that the monopolist would charge if it could not price discriminate.
QUESTION 5The exchange-rate arrangement that emerged from the Bretton Woods conference is often referred to as the:
a. dollar exchange standard.
b. euro exchange standard.
c. gold exchange standard.
d. silver exchange standard.
e. flexible exchange rate standard.
QUESTION 6In the small country of Talisman, the liquor industry is monopolized by a single producer Best Drinks Inc Best Drinks charges high-end customers like 5-star hotels a much higher price than it charges local pubs. This discrimination is possible only if:
a. price discrimination is legal in Talisman.
b. we assume Best Drinks can prevent pub owners from buying liquor and selling it to 5-star hotels.
c. consumers in Talisman have similar price elasticities of demand for liquor.
d. we assume Best Drinks is a natural monopoly.
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