The ABC Computer Company spends a lot of money for advertising designed to convince you that their personal computers are superior to all other personal computers. If the ABC Company is successful, the demand for ABC personal computers
A. and the demand for other firms? personal computers will become more price elastic.
B. will become less price elastic, but the demand for other firms? personal computers will become more price elastic.
C. and the demand for other firms? personal computers will become less price elastic.
D. will become more price elastic, but the demand for other firms? personal computers will become less price elastic.
Answer: B
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When comparing partial-equilibrium effects to general-equilibrium effects, one can conclude that
A) general-equilibrium effects are always larger. B) partial-equilibrium effects are always larger. C) the effects are of equal size. D) one cannot determine before the fact which effect is greater.
If the FOMC purchases government bonds priced at $5,000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:
a. increase by $5,000. b. increase by $4,000. c. increase by $1,000. d. decrease by $5,000. e. decrease by $1,000.
When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,
a. consumer surplus increases and total surplus increases in the market for that good. b. consumer surplus increases and total surplus decreases in the market for that good. c. consumer surplus decreases and total surplus increases in the market for that good. d. consumer surplus decreases and total surplus decreases in the market for that good.
If the price elasticity of demand for automobiles is 2:
A. a 10 percent increase in price would result in a 10 percent decrease in quantity demanded. B. a 10 percent increase in price would result in a 20 percent increase in quantity demanded. C. a 10 percent decrease in price would result in a 20 percent decrease in quantity demanded. D. a 10 percent decrease in price would result in a 20 percent increase in quantity demanded.