You go to a carnival in town intending to purchase rides for your children. When you get there they have an offer where everyone's first two rides are free. They obviously hope that the free rides will end up making them more money in the long run than if they charged for all rides. First, show on an indifference curve and budget line graph a solution that would make the free rides a bad idea for the company. Then, on a second graph, show a possible situation that would make the giveaway a success that should be repeated.
What will be an ideal response?
In this graph the customer would have bought 2 rides if no free rides were given. With the free rides the customer ends up with 3 so only one extra ride is purchased. The company would have been better off if it had not given the rides.
In the graph below the customer would have bought only one ride if the free ride was not offered. After the free ride offer the customer buys 4 rides. Assuming that there is not a capacity crowd at the carnival the company will have doubled its sales because of the offer. With the free rides the customer ends up with 4 of which 2 are purchased. Since two is better than one the offer is a good deal.
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The Car Allowance Rebate System (CARS)
a. was launched as a stimulus program by the Reagan administration b. was introduced under the Consumer Assistance to Recycle and Save Act of 2009 c. is currently available to purchasers of plug-in hybrids d. was the first-ever Vehicle Accelerated Vehicles Retirement (VAVR) program
Explain what the Five Forces Model is useful for and identify each of them
What will be an ideal response?
If unplanned inventory investment is zero
A. aggregate output equals planned aggregate expenditures. B. aggregate output is positive when planned aggregate expenditures are positive. C. aggregate output is greater than planned aggregate expenditures. D. aggregate output is less than planned aggregate expenditures.
A researcher wants to test the effects of daily meditation on stress levels of individuals. She divides the participants randomly into a treatment group and into a control group and conducts an experiment
She pays for meditation classes for one-half of the subjects, and the other half does not join the class. Which of the following statements is true of the two groups in this experiment? A) The participants in the treatment group are assigned by chance, whereas the ones in the control group are assigned by choice. B) The participants in the control group are assigned by chance, whereas the participants in the treatment group are assigned by choice. C) The treatment group is the group of subjects that receives finance from the researcher for meditation classes; the control group is the group that does not. D) The control group is the group of subjects that receives finance from the researcher to join the meditation class; the treatment group is the group that does not.