Which of the following statements is not correct?
a. Critics of advertising argue that firms advertise to manipulate consumers' tastes.
b. Defenders of advertising argue that advertising provides valuable product information to consumers.
c. An industry with many brand name products will be more competitive than one with many generic products.
d. The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product.
c
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In a dynamic game, rational players
A) will reject outcomes that are not subgame perfect. B) use backward induction to determine best responses. C) have strategies that select a Nash equilibrium in the game as a whole. D) All of the above.
Which of the following statements is true?
a. The law of diminishing returns states that beyond some point the marginal product of a variable resource continues to rise. b. The marginal product is the change in total output by adding one additional unit of a fixed input. c. Fixed costs are costs which vary with the output level. d. When marginal productivity of a variable input is falling then marginal costs of production must be rising. e. When marginal cost is below average cost, average cost rises; when marginal cost is above average cost, average cost falls.
Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the greater potential for injury it creates by not wearing one in the unlikely event he is in an accident. To an economist, Jim is
a. making an irrational choice. b. making a rational choice. c. not fully considering the personal costs and benefits of his decision. d. not responding to the incentives he faces.
What is the substitution effect for leisure demand?
What will be an ideal response?