Products such as office supplies are examples of
A) experience goods.
B) simple goods.
C) search goods.
D) selective goods.
Answer: C
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The commodity substitution bias is that consumers substitute high-quality goods for low-quality goods
Indicate whether the statement is true or false
Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. As a result of this change
A) price will be higher, output will be lower, and the deadweight loss will be eliminated. B) consumer surplus will be smaller, producer surplus will be greater, and there will be a reduction in economic efficiency. C) consumer surplus will be smaller and producer surplus will be greater. There will be a net increase in economic surplus. D) price will be higher, consumer surplus will be greater, and output will be greater.
Microsoft wants to calculate the effect of a worldwide 5% price cut on its sales of Excel to clients in different countries. Microsoft sells Excel at different prices in U.S., Japan and Europe. Before the price cut U.S
sales were twice sales in Japan and Europe. If the price of elasticity of demand in the U.S., Japan and Europe are -3, -4, and -2 respectively, the worldwide sales rise by A) 10%. B) 15%. C) 20%. D) 25%. E) none of the above
The more narrowly a product is defined, the less elastic the demand for that product will be
a. True b. False