A brand of wine is priced at only $5 per bottle, far below the market price of most high quality wines. Before any reputation exists for the wine, consumers buy very little of this inexpensive wine because they interpret the low price to mean that the wine is of poor quality. The company decides to change the label on the wine to show that it has won awards for quality. This label change is an
example of
a. signaling.
b. screening.
c. selecting.
d. All of the above are correct.
a
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
In Problem 5, in the long run, what is the market price and the quantity of paper produced? What is the number of firms in the market?
What will be an ideal response?
Explain the relationship between coupon rate (or coupon yield) and current yield.
What will be an ideal response?
An increase in individual income taxes ________ disposable income, which ________ consumption spending
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases