Most of the interest in using incentives arises due to uncertainty.
Answer the following statement true (T) or false (F)
True
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After graduation, you start an internet-based firm that allows people to buy and sell books online. Based on your market research, you believe there are two basic types of customers
The first type is the casual reader who has relatively low willingness-to-pay for your services, and their annual demand is Q1 = 30 - 40P where Q1 is the number of books traded per year and P is the price you charge per book traded. The second type of customer is the avid reader who has relatively high willingness-to-pay for your services, and their demand is Q2 = 100 - 50P. The marginal cost of your online service is $0.40 per book traded. a. If you set your usage fee equal to the marginal cost, how many books will each type of customer trade on your system? What is the consumer surplus enjoyed by each type of customer? b. What is the optimal entry fee that you should charge under a two-part tariff pricing scheme for access to your online market? How much consumer surplus is left for the two types of customers after they pay the entry fee and usage fee?
Betty's Bagels makes and sells bagels from their local bakery. If Betty's Bagels become more popular with local residents and the probability of selling additional bagels increases, Betty's expected marginal benefit curve from holding additional bagels in inventory will shift to the ________ and the profit-maximizing number of bagels to hold in inventory will ________.
A) right; decrease B) left; increase C) left; decrease D) right; increase
Gross domestic product is the sum of:
A. the market values of all final goods and services produced within a country in a given period of time. B. the market values of all intermediate goods and services produced within a country in a given period of time. C. all final goods and services produced by a country's citizens in a given period of time. D. the market values of all final goods and services produced by a country's citizens in a given period of time.
The transactions demand for money exists because:
a. people want to maintain a speculative cash reserve. b. people are insensitive to interest rate fluctuations and prefer to hoard money. c. people want to be prepared for unplanned emergency expenditures. d. people prefer cash over bank deposits. e. people do not receive their income at the same time they spend it.