Ashley eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana
a. can be thought of as the total benefit Ashley enjoys by eating two bananas minus the total benefit she would have enjoyed by eating just the first banana.
b. determines Ashley's marginal cost of the first and second bananas.
c. does not depend on how many bananas Ashley has already eaten.
d. cannot be determined unless we know how much she paid for the bananas.
a
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A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated. How do these problems affect the innovating firm?
A) The firm is protected by a first-mover advantage: initial design flaws tend not to harm a firm significantly because consumers resist changing products for fear of incurring high switching costs. B) They reduce profits for the new innovations and open the door to competitors who can enter the new market with a better product. C) The firm's cost increases as it improves the product but it will not be able to raise its price for fear of alienating customers. Consequently, its profits will erode although its market share remains secure. D) Because these design flaws were not anticipated, consumers tend to be more forgiving and are likely to remain loyal to the company and its products.
The Sandy Deli operates near a college campus. It has been selling 325 sandwiches a day at $1.75 each and is considering a price cut. It estimates 450 sandwiches would sell per day at $1.50 each. Calculate the marginal revenue of such a price cut and the elasticity between the two points.
What will be an ideal response?
Which of the following would be an external cost associated with the production of coal- fired electricity?
a. the cost of misleading advertising b. the increase in labor costs as the firm pays its workers who are adversely affected by the coal-fired technology c. the pollution generated by the firm's physical plant d. the decrease in value consumers attach to this kind of electricity e. the value people derive from turning off lights when they leave the room, that is cost-saving
The opportunity cost of working one hour is the sum of the values you would have received from all other activities you could have done in that hour
a. True b. False Indicate whether the statement is true or false