Suppose that the cost of living is 25 percent higher in Chicago than in Indianapolis. If wages in Chicago are 10 percent higher on average than wages in Indianapolis, then eventually the labor supply will
a. fall in Indianapolis, increasing the average wage there
b. fall in Chicago, increasing the average wage there
c. rise in Indianapolis, increasing the average wage there
d. rise in Chicago, decreasing the average wage there
e. fall in Indianapolis, decreasing the average wage there
B
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Refer to Figure 12-15. Assume that the medical screening industry is perfectly competitive and that some firms are making short-run losses
Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health. Which of the diagrams in the figure best describes what happens in the industry? A) Panel A B) Panel B C) Panel C D) Panel D
Provide a simple definition of the price elasticity of demand and explain why knowing the price elasticity for her product is useful to the firm's manager
What will be an ideal response?
One theory of advertising suggests that
a. advertising is more effective for industrial products than consumer products. b. the content of advertising may be irrelevant to product success in the market. c. regulations limiting advertising benefit consumers, but not producers. d. television advertising is more effective in reducing competition than ads on websites.
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.