All of the following are limitations of direct consumer surveys except: A) the possibility that consumers’ responses may not reflect their actual behavior in the market place. B) the possibility of response biases because survey respondents may not want to reveal their true preferences. C) the likelihood that respondents will deliberately and systematically mislead interviewers. […]
Assume there is a simultaneous decrease in the incomes of people in the market for new homes and a decrease in the wages paid to carpenters, plumbers, and electricians. All else constant, we can predict, with certainty, that in the market for new homes the equilibrium: A) quantity of new homes will decrease. B) quantity […]
Explain how labor resistance and political and legislative influences reduce the ability of firms to minimize their costs of production. What do the two have in common in this regard? What will be an ideal response? ANSWER Both labor resistance and political and legislative influences constrain the set of choices firm managers have when […]
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 […]
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
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
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
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
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 […]
A firm’s investment expenditures are positively related to market interest rates. Indicate whether the statement is true or false ANSWER FALSE
