Assume the price elasticity of demand for a product is -4. In this case, the firm’s optimal markup is (approximately): A) 400 percent. B) 100 percent. C) 33 percent. D) 25 percent. ANSWER C
Date: September 10th, 2020
On September 3, 2003, Universal Music Group announced plans to reduce the wholesale price of music CDs it distributes by an average of 25-30 percent. All else constant (i.e. , ignoring the effects of file-sharing programs), how would this change affect the retail market for new music CDs? A) Demand for CDs would increase, causing […]
Date: September 10th, 2020
The approach to analyzing consumer behavior that asks consumers to rank and choose among different product attributes to reveal their relative valuation of different characteristics is called: A) a direct consumer survey. B) contingent valuation. C) the hedonic estimation technique. D) conjoint analysis. ANSWER D
Date: September 10th, 2020
The real interest rate, business taxes, expected profits and business confidence, and capacity utilization are embedded in the slope of the investment function. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Economists describe short-run decisions as “constrained” decisions, while long-run decisions are described as “planning” decisions. Referring to a firm’s short-run average cost function and long-run average cost function, explain this What will be an ideal response? ANSWER In the short run, at least one of the inputs in the firm’s production function is fixed […]
Date: September 10th, 2020
Fear of a major recession causes stock prices to fall, everything else held constant, which in turn causes consumer spending to A) increase. B) remain unchanged. C) decrease. D) cannot be determined. ANSWER C
Date: September 10th, 2020
In the foreign exchange market, U.S. residents wishing to purchase foreign exports or foreign real and financial assets must: A) demand U.S. dollars by supplying foreign currency. B) demand U.S. dollars by supplying U.S. dollars. C) supply U.S. dollars by demanding foreign currency. D) none of the above. ANSWER C
Date: September 10th, 2020
Which of the following approaches to understanding and predicting consumer behavior depends primarily on the knowledge and experience of a firm’s employees and its suppliers? A) Direct consumer surveys. B) Expert opinion. C) Analysis of historical data. D) Test marketing and price experiments. ANSWER B
Date: September 10th, 2020
In the foreign exchange market, the quantity U.S. dollars demanded is a function of: A) the amount of imports and the level of capital outflows. B) the amount of exports and the level of capital outflows. C) the amount of exports and the level of capital inflows. D) none of the above. ANSWER C
Date: September 10th, 2020
What are the two primary factors that influence a firm manager’s choice between a labor-intensive and a capital-intensive method of production? How does each factor influence the manager’s choice. What will be an ideal response? ANSWER The two primary factors are the technology of the production process and the prices of the inputs of […]
Date: September 10th, 2020
