Consider the following statements:
a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area.
b. Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment.
c. Manufacturers produce less of a particular cell phone when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?
A) a only.
B) b only.
C) c only.
D) a and b.
E) a, b, and c.
Answer: A
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A compensation package offered by employers often includes
A. wages. B. health benefits. C. vacations. D. pensions. E. all of these answer options are correct.
In the mid-to-late 1990s, changes in the health care industry, substantially reduced health care costs relative to other goods and services. Which of the following is an appropriate description of the mechanism behind this supply shock?
A) The AS curve likely shifted to the right which likely explains the short-run fall in unemployment. B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s. C) A positive output gap would have resulted in the short-run but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s. D) all of the above E) none of the above
Although originally its articulation may have been a mistake, the rule of reason has become a useful principle for interpreting antitrust law
Indicate whether the statement is true or false
Firms with market power offer a differentiated product in order to
a. follow the trends b. increase market power c. support its contractors in low-wage countries d. fill up costly warehouses e. All of the answers are correct.