Assume that a retailer sells 800 six packs of Dr. Pepper per day at a price of $3.00/six-pack. You, as an economic analyst, estimate that the cross-price elasticity between Dr. Pepper and Coca-Cola is 0.6. If the retailer raises the price of Coca-Cola by
10%, how would the sales of Dr. Pepper be affected, ceteris paribus?
A) Sales of Dr. Pepper would rise by 48 six-packs B) Sales of Dr. Pepper would rise by 10%
C) Sales of Dr. Pepper would fall by 48 six-packs D) None of the above
Answer: A
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In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, a decline in the reserve requirement ________ the ________ curve of reserves and causes the federal funds interest rate
to fall, everything else held constant. A) decreases; demand B) increases; demand C) increases; supply D) decreases; supply
Andrew Carnegie, Steven Jobs and Sam Walton were all innovators who are also considered _____________.
Fill in the blank(s) with the appropriate word(s).
When a second firm enters a market, the original firm's profits decline because:
A. the original firm's price decreases. B. the original firm's ATC increases. C. the original firm's quantity decreases. D. All of these are correct.
A firm will ________ at the output where marginal cost increases
A. begin to experience increasing returns B. start to experience losses C. begin to experience diminishing returns D. become profitable