A potential negative effect of advertising for society is that it can:
A. Be the major cause of price wars among firms in the industry
B. Reduce mutual interdependence and increase competition
C. Be self-canceling and contribute to economic inefficiency
D. Lower barriers to entry and undermine profits in the industry
C. Be self-canceling and contribute to economic inefficiency
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Assume that the demand curve for DVD players shifts to the left and the supply curve for DVD players shifts to the right, but the supply curve shifts more than the demand curve. As a result
A) both the equilibrium price and quantity of DVD players will decrease. B) the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease. C) the equilibrium price of DVD players may increase or decrease; the equilibrium quantity will increase. D) the equilibrium price of DVD players will decrease; the equilibrium quantity will increase.
Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit:
A. there will be an excess demand for the product. B. there will be an excess supply of the product. C. the quantity demanded of the product will be less than the quantity supplied of that product. D. there will be a surplus of that product.
The demand for a normal good is
A. related to the supply of the good. B. directly related to income. C. unaffected by changes in consumer tastes and preferences. D. unaffected by changes in the prices of complementary goods.
It is possible for a competitive firm that is maximizing profits in the short run to make its profits even bigger in the long run by expanding its plant, assuming that the product price stays the same.
Indicate whether the statement is true or false