Ceteris paribus, an increase in consumers' income will result in:
a. a decrease in demand for an inferior good
b. an increase in demand for an inferior good.
c. a decrease in the quantity supplied of an inferior good.
d. an increase in the quantity supplied of an inferior good.
a
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Given the demand function in log-linear form: Q = 120 - 1.5P + 12ADV where Q = quantity, P = price, and ADV = advertising expenditures, what is the price elasticity?
A) 1.5, inelastic B) -1.5, elastic C) 120, elastic D) 12, elastic
Marginal profit is the addition to a firm’s total profit from a
A. $1 change in its price. B. one-unit change in its output. C. reduction in total cost. D. reduction in marginal cost.
A manager believes there is a 5 percent chance their firm will have to pay $1,000,000 and a 95 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $150,000 (pay the plaintiff), which of the following is true?
A) The manager is a risk lover. B) The manager is risk neutral. C) The manager is risk intolerant. D) The manager is risk averse.
Greg's Tasty Ice Cream is considering building a new ice cream factory that costs $8.3 million. The company accountants believe that, not accounting for interest costs, building the factory will increase profits by $5 million the first year, $4 million the second year and have no value thereafter. Greg's Tasty Ice Cream should build the factory if the interest rate is
a. 3% but not if it is 4%. b. 4% but not if it is 5%. c. 5% but not if it is 6%. d. 6% but not if it is 7%.