Before Summer 2008, If You Wanted a Cell Phone in Bhutan

question 420

Multiple Choice

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. Then, this past spring, a privately owned competitor, Tashi, was let in. What do you predict will happen to equilibrium price and quantity in the cell phone market?

• A) Price will decrease and quantity will increase.
• B) Price will increase and quantity will decrease.
• C) Both price and quantity will increase.
• D) Both price and quantity will decrease.

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Definitions:

Nominal Annual Interest Rate

The stated interest rate of a bond or loan, not adjusted for inflation, which indicates the periodic interest payment.

Payment Plans

Agreements outlining how a borrower will pay back a loan or an installment purchase over a specified time period.

Amortized Mortgage

A loan where the principal is paid down over the life of the loan, typically through fixed monthly payments.

Nominal Interest Rate

The rate of interest before adjustments for inflation, reflecting the rate at which money can be borrowed or lent.