Which of the following might be said by a supporter of advertising?
a. “Advertisers assume people make rational choices.”
b. “Advertisers focus on what producers need to sell.”
c. “Advertisers often provide misleading information about products.”
d. “Advertisers camouflage the differences between products.”
a. “Advertisers assume people make rational choices.”
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The price elasticity of demand for oil is estimated at 0.05. This value means a 10 percent increase in the
A) quantity of oil demanded will result from a 0.5 percent increase in the price of oil. B) quantity of oil demanded will result from a 0.5 percent decrease in the price of oil. C) price of oil will increase the quantity of oil demanded by 0.5 percent. D) price of oil will decrease the quantity of oil demanded by 0.5 percent.
Which of the following is not an example of a two-part pricing scheme in the context of price discrimination?
A) A customer pays full price for the first 10 copies of a software program and then receives a 10 percent discount on each additional copy it buys. B) A firm, e.g., Sam's Club or Costco, charges a membership fee that is separate from the price paid for items purchased from the firm. C) A customer pays a $10 cover charge to enter a bar and then pays $5 for each beverage. D) An amusement park charges an admission fee and then charges a per unit price for each of the rides offered by the park.
The purchasing power parity (PPP) theory suggests the prices of identical items will equalize internationally. An illustration that supports this theory is the fact that the price of a McDonald's "Big Mac" is the same around the world
a. True b. False
Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.
Figure 6.5Refer to Figure 6.5. Molly's budget constraint is AD. If the price of CDs decreases, her new budget constraint becomes
A. AE. B. BD. C. AO. D. EF.