Some consumer electronics products such as plasma TVs, DVD players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of
economies of scale and cheaper technologies). Which of the following is the best explanation for this observation?
A) Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait.
B) More firms are likely to enter the consumer electronics market over time, forcing market prices down.
C) Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods.
D) After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive consumers.
D
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If aggregate demand increases and, as a result, the price level increases but equilibrium real GDP and employment remain unchanged, we can assume that the aggregate demand curve
A. intersects the upward-sloping segment of the aggregate supply curve. B. intersects the vertical segment of the aggregate supply curve. C. intersects the horizontal segment of the aggregate supply curve. D. is horizontal.
Which of the following is false about potential output?
A. It is the level of output an economy can achieve when labor is employed at its natural level. B. It is the long run output level that guarantees price stability. C. If a country is producing its potential output, then it is producing at a point on its production possibilities frontier. D. It is also called the natural level of real GDP.
Marginal utility
A) at first rises and then declines as a person consumes more of a good or service. B) can be thought of as being the equivalent to total utility. C) equals the total satisfaction from consumption of goods and services. D) is stable, but then as a person consumes more of a good or service, has a propensity to increase.
Which of the following is NOT associated with the new growth theory?
A. technology B. research C. natural resources D. innovation