Two bottles of over-the-counter pain reliever sit side-by-side in a grocery store: Advil (a brand name) sells for $5.00, while Feel Better (not a brand name) sells for $2.50 . In a typical day the store sells some of each type of pain reliever, which suggests that
a. no rational consumer would spend twice as much for Advil as he would for Feel Better.
b. some consumers must perceive that Advil is a higher quality product.
c. Advil has no incentive to maintain the quality of its product just because of the Advil brand name.
d. Advil spends money on advertising to reduce competition in the market.
b
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If transfer payments increase then we would most likely conclude what about government spending as a result of this increase?
A. Government spending would not change if transfer payments increase. B. We cannot reasonably conclude anything about government spending. C. Since transfer payments have gone up this has caused government spending to increase. D. Since transfer payments have gone up this has caused government spending to decrease.
When compared to the profit-maximizing price and quantity supplied, an average-cost pricing policy for a natural monopoly causes the price the monopolist charges to ________ and the quantity it sells to ________.
A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase
If the demand curve of a perfect competitor is tangent to (just touching) the firm's average total cost curve,
A. the firm is definitely in the short run. B. the firm is probably in the short run. C. the firm is definitely in the long run. D. the firm is probably in the long run.
The Endangered Species Act has
A. failed in that no species of plant or animal is better off now than when the law was passed. B. succeeded marginally in that 33 of the more than 1200 endangered species now have stable populations. C. succeeded in that there are no endangered species to be concerned about in the U.S. D. made things worse because it allows more species to become extinct.