Thinking about information as a good, what determines the information people are willing to pay for?
What will be an ideal response?
People are willing to pay for information so long as the marginal cost is less than or equal to its marginal benefit. For instance, consumers are willing to purchase information that has a marginal benefit to them that exceeds the price they must pay. Consumers might be willing to purchase information about the price(s) of large-ticket goods and services that are of interest. Workers might well be interested in buying information about salaries paid in occupations that interest them or salaries paid their co-workers. Employers are willing to buy information about the average salary offer given to college graduates with different majors.
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If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam's pizzas in this range is:
a. price inelastic. b. price elastic. c. unit elastic. d. cross elastic. e. income inelastic.
As a country develops economically, what changes usually take place in the goods it exports?
A. Exports go from being diversified to being specialized in whatever the country finds to be its comparative advantage. B. Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods. C. Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products. D. There is little change because comparative advantage does not change.
The way in which an oligopolist acts in response to a price change by a competitor is known as a
A) zero-sum game. B) positive-sum game. C) reaction function. D) cooperative game.
Dynamic tax analysis assumes that
A) an increase in a tax rate may lead to a decrease in the tax base. B) an increase in a tax rate will lead to an increase in the tax base. C) an increase in a tax rate will leave the tax base unchanged. D) the tax base will always remain unchanged.