Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $2,000 and a unit of advertising on the radio costs $5,000. At their current advertising levels, the
marginal benefit of advertising in the flyer is $2,500 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true?
A) To maximize profits, Franco's should increase the amount of advertising in flyers.
B) To maximize profits, Franco's should decrease the amount of radio advertising.
C) To maximize profits, Franco's should decrease the amount of advertising in flyers.
D) Franco's is currently maximizing its profits from advertising.
A) To maximize profits, Franco's should increase the amount of advertising in flyers.
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A) becomes more vertical. B) shifts to the left. C) becomes more horizontal. D) shifts to the right.
Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will
A) decrease because Exxon and Shell gas are complements. B) decrease because Exxon and Shell gas are substitutes. C) increase because Exxon and Shell gas are substitutes. D) increase because Exxon and Shell gas are complements. E) not change Exxon and Shell are different brands of gasoline.
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a. Economies of scope b. Tacit collusion c. Monopoly power d. Perfect competition
For a country which has a relatively high rate of inflation and wants some form of pegged exchange rate, which of the following exchange-rate regimes is the best choice?
A. Adjustable peg B. Crawling peg C. Fully fixed exchange rate D. Fully convertible currency