The relationship between a consumer's monthly income and monthly consumption of four products, W-Z, is shown below. Quantity ConsumedIncomeWXYZ$4,00045902005,000601801015Which product listed is an example of an inferior good?
A. W
B. X
C. Y
D. Z
Answer: C
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Given that the firm only chooses to sell the no-name brand, how should it price its product?
a. Price low, sell to both users b. Price high, sell only to the professional chefs c. Price low, sell only to the professional chefs d. Price high, sell only to the home users
Stockholders of ComfortAir Corporation, an air conditioner and furnace manufacturer, are concerned that the companies executives may take on greater risks than stockholders desire. This example illustrates
a. moral hazard and market risk. b. moral hazard and firm specific risk. c. adverse selection and market risk. d. adverse selection and firm specific risk.
Dividends
a. are the rates of return on mutual funds. b. are cash payments that companies make to shareholders. c. are the difference between the price and present value per share of a stock. d. are the rates of return on a company's capital stock.
Recall the Application about the British experience with private water companies in the nineteenth century to answer the following question(s).Recall the Application. The British experience with water privatization showed that:
A. a single firm providing water will be profitable, but two firms will not. B. two or more firms providing water will be profitable, but a single firm will not. C. it does not matter how many firms provide water, as none will be profitable. D. it does not matter how many firms provide water, as all will be profitable.