A given income-expenditure diagram always assumes a variable price level
a. True
b. False
Indicate whether the statement is true or false
False
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According to the text, why would firms in an industry follow the price leadership of another firm?
a. fear of retribution from the price leader if they don't follow b. smaller firms do not have the resources to determine optimal price c. the price chosen by the leading firm is the optimal one for all d. profit will be distributed in accordance with firms' market share e. every firm in the industry has confidence the leading firm will act for the benefit of all firms
The elimination of the federal budget deficit in the 1990s put downward pressure on real interest rates
a. True b. False Indicate whether the statement is true or false
Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Harry should
A. not hire the second barber because he is less productive than the first barber. B. hire the second barber because he will add $108 to profits. C. not hire the second barber because he will diminish profits. D. hire the second barber because he will add $28 to profits.
Product differentiation that makes the product better than a rival's product from everyone's perspective
A. makes the rival's product obsolete. B. is known as horizontal differentiation. C. always increases welfare. D. is known as vertical differentiation.