When is a buyer NOT willing to spend a lot of time and energy researching the market?
a) when buying a large quantity of goods
b) when there are many identical products available
c) when the savings to be made are small
d) when prices vary but quality is the same
Ans: c) when the savings to be made are small
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The price elasticity of demand for oil is estimated at 0.05. This value means a 10 percent increase in the
A) quantity of oil demanded will result from a 0.5 percent increase in the price of oil. B) quantity of oil demanded will result from a 0.5 percent decrease in the price of oil. C) price of oil will increase the quantity of oil demanded by 0.5 percent. D) price of oil will decrease the quantity of oil demanded by 0.5 percent.
According to the intertemporal substitution effect, when the price level rises and other things remain the same
A) the interest rate falls. B) the interest rate rises. C) the quantity of money increases. D) government taxes rise.
Suppose that after disposable income increases by $500 billion, consumption expenditures increase by $450 billion. Therefore, the marginal propensity to consume would be
a. 1.11 b. 9.00 c. 0.09 d. 0.90 e. 0.82
The notion of opportunity cost can be represented graphically by the
a. area inside the production possibilities frontier. b. slope of the production possibilities frontier. c. vertical distance from the horizontal axis to the production possibilities frontier. d. horizontal distance from the vertical axis to the production possibilities frontier. e. sum of the horizontal and vertical distances to the production possibilities frontier.