In the absence of economies of scale, advertising and product differentiation:
A. reduce social welfare by increasing average total cost.
B. benefit consumers if product variety increases.
C. increase social welfare by giving consumers a greater variety of goods to choose from.
D. have an uncertain effect on welfare because they increase both average total cost and product variety.
Answer: D
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The vicious circle of poverty makes it difficult for an LDC to:
a. establish political institutions. b. control inflation. c. save and invest. d. fix its exchange rate.
Suppose the government of the United States has instituted an expansionary fiscal policy to boost aggregate output. The United States has a floating exchange-rate regime and there is a high degree of capital mobility.a. If the exchange-rate value of the dollar remains steady, what are the effects of the expansionary fiscal policy on the U.S. national product and income? What is the effect on the U.S. unemployment rate? Explain.b. Following the fiscal expansion, what is the likely pressure on the exchange-rate value of the dollar? Explain.c. What are the implications of the change in the exchange-rate value of the pound for U.S. national product and unemployment? Does the change in the exchange rate tend to reinforce or counteract the expansionary thrust of U.S. fiscal policy? Explain.
What will be an ideal response?
When Microsoft put together a set of products with the Windows operating system, it was practicing
A) bundling. B) tie-in sales. C) versioning. D) compacting.
If the steady-state capital-labor ratio is equal to the Golden Rule capital-labor ratio, then in the steady state,
A. investment per worker is as large as possible. B. output per worker equals depreciation per worker. C. output per worker equals investment per worker. D. consumption per worker is as large as possible.