Return to the ready-to-eat cereal example from the previous question. Now assume that there is only one kind of cereal, so the manufacturer cannot distinguish between types of consumer (adults vs. children, of which suppose there are equal numbers in the market). What is the optimal menu of cereal boxes?
a. a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for $1.12.
b. a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for 64 cents.
c. a 2 ounce box (which adults will buy) sold for 36 cents; a 4 ounce box (which children will buy) sold for 76 cents.
d. No menu; the manufacturer is better off just selling a 5 ounce box for $1.12, which is only purchased by children.
d
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Assume a government likes a particular equilibrium along the contract curve. It can achieve that equilibrium through competition and income redistribution
What will be an ideal response?
During the colonial period the cost of building a ship in New England was typically _________ the cost of building the same ship in England
a. greater than b. less than c. about equal to d. not comparable to
Both Arnold and Will work 10 hours a day. Arnold can produce six baskets of goods per hour while Will can produce four baskets of the same goods per hour. It follows that Arnold's
a. productivity is greater than Will's. b. output is greater than Will's. c. standard of living is higher than Will's. d. All of the above are correct.
By decreasing the required reserve ratio, the Federal Reserve will
A. increase the money supply unless accompanied by a decrease in the discount rate. B. increase the money supply unless banks hold on to excess reserves instead of lending them. C. decrease the money supply by the amount of the initial change caused by the decreased required reserve ratio. D. decrease the money supply by a multiple of the initial change caused by the decreased required reserve ratio.