By promoting its brand name heavily, the monopolistically competitive firm
A) earns more profit in the long run.
B) signals its long-term intention to stay in the industry.
C) signals its intention to leave the industry.
D) guarantees a short run profit.
Answer: B
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Promotional pricing is designed to take advantage of differences in the price elasticity of demand among customers. As such, it is an application of first-degree price discrimination
Indicate whether the statement is true or false
Motivations for behavioral economics include:
A. people sometimes make choices that are inconsistent with standard economic theory. B. all choices made by individuals are consistent with standard economic theory. C. standard economic theory can lead to unreasonable conclusions about consumer welfare. D. people sometimes make choices that are inconsistent with standard economic theory and standard economic theory can lead to unreasonable conclusions about consumer welfare.
Paul, a U.S. citizen, builds a telescope factory in Israel. His expenditures
a. increase U.S. and Israeli net capital outflow. b. increase U.S. net capital outflow, but decrease Israeli net capital outflow. c. decrease U.S. net capital outflow, but increase Israeli net capital outflow. d. None of the above is correct.
A value of the absolute price elasticity of demand equal to 0.25 indicates that
A) a 5% decrease in price leads to a 2% increase in quantity demanded. B) a 2% decrease in price leads to a 25% increase in quantity demanded. C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. D) a 0.25% decrease in price leads to a 1% increase in quantity.