What is meant by product differentiation?
What will be an ideal response?
Product differentiation is a strategy that firms use to achieve market power. It involves producing products that have distinct positive identities in consumers' minds.
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To maximize the social pie, a tax on pollution must equal the external cost created by the polluting activity
Indicate whether the statement is true or false
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
In the 1990s and early 2000s, Japan's central bank reduced real interest rates to zero percent, but investment spending did not respond enough to bring the economy out of recession. Japan's experience is an illustration of:
A. the crowding-out effect. B. "pulling on a string." C. the Taylor rule. D. the liquidity trap.
The slope of the isoquant is
A. negative. B. the marginal rate of technical substitution. C. -MPL/MPK. D. All of the above are correct.