If there are only two firms in an industry, the value of the Herfindahl index must be 5,000
a. True
b. False
B
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When the price of a good rises, the resulting change in relative price causes the consumer to reduce his quantity demanded of that good, even when the consumer is income-compensated so that he remains indifferent about the price change. This observation is known as the
a. Giffen good phenomenon. b. law of demand. c. substitution effect. d. income effect.
To differentiate its product, a monopolistic competitive firm will engage in all of the following advertising practices EXCEPT
A) direct marketing. B) mass marketing. C) interactive marketing. D) indirect marketing.
A shoe salesman working on commission must decide whether to work hard or shirk. Working hard would increase the probability of a sale from 20% to 70% but the effort would cost him $5 . If the commission on a typical pair of shoes was $12, would he decide to work hard?
a. Yes because it is higher than what it costs him in effort b. Yes because it is higher than zero c. No, because it costs him more in effort d. None of the above
Suppose agricultural technology results in increased grain yield for U.S. farmers. The increased supply of grain will drive down grain prices. Because the demand for grain is price elastic, lower prices will result in lower total farm revenue
Indicate whether the statement is true or false