Author Question: Suppose there is only one producer of frames, a necessary component in manufacturing computer ... (Read 35 times)

robinn137 · **on:** Jun 30, 2018

Suppose there is only one producer of frames, a necessary component in manufacturing computer monitors. Because of the threat of entry, this firm charges its customers a price equal to average cost. One reason that a producer of computer monitors may make rather than buy frames is
a. the frame supplier may be unreliable
b. the total cost of the components of frames is the same as the price of frames purchased in the market
c. the frame manufacturer has no incentive to make high-quality frames
d. managers at the computer monitor firm place a high value on their time
e. the frame manufacturer will soon go out of business because firms do not produce goods for the market that can be made in-house

Question 2

Under the gold standard, all except one of the following are true. Which is not true?
a. Paper currency was convertible into gold at a fixed rate.
b. A balance-of-payments deficit would result in a loss of gold.
c. A balance-of-payments surplus would result in an inflow in gold.
d. The money supply of any country was largely determined by flows of gold.
e. A surplus country experienced a rise in its money supply and a drop in its price level.