Using the general concept of elasticity, would you expect the elasticity of demand for advertising to be positive or negative? Explain.
What will be an ideal response?
Firms would advertise only if they believe it would increase sales. However, with regard to the cost or price of advertising, a firm would purchase a greater amount of advertising at a lower price per advertisement, As such, we would expect the elasticity of demand for advertising to be negative with regard to price.
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Studies by economists have tended to show that countries with more independent central banks have
A) lower unemployment. B) more inflation. C) higher unemployment. D) less inflation.
We have worked a lot with homothetic production technologies. Suppose instead that a production process that uses capital and labor is quasilinear in capital and that capital is fixed in the short run. Then, assuming the firm currently profit maximizes at a given wage and rental rate, the short and long run slices of the production frontier are identical.
Answer the following statement true (T) or false (F)
A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million. This firm should
a) divest itself of some of its capital b) issue more stock c) continue to operate as it is d) invest in new plant and equipment e) issue bonds
The cost of producing one more pizza is the
A) price. B) marginal benefit. C) marginal cost. D) producer surplus.