The extensive sunk costs of heavily advertised products suggest a reason for believing that those products will
A. turn out to have higher quality than unadvertised products.
B. cause consumers to question their intrinsic value.
C. turn out to have lower quality than unadvertised products.
D. be hard to sell to the consumer without heavy persuasion.
Answer: A
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A sensible buyer will want to acquire additional information before committing herself as long as the expected value of the information she is gathering
A) is greater than the anticipated value of the purchase. B) is greater than the expected cost of acquiring it. C) will enable her to avoid all mistakes. D) will enable her to avoid possible mistakes she will subsequently regret having made.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
In perfectly competitive markets, transactions costs are:
A. generally quite high. B. a natural byproduct of making the transaction. C. low or nearly zero. D. seen as a nuisance and generally ignored when making a transaction.
In foreign exchange markets, demand and supply become closely interrelated, because a person or firm that demands one currency must at the same time _____________ another currency—and vice versa.
a. supply b. create c. demand d. locate