Which would be a likely cause of an increase in the price of pizza?
a. A decrease in the price of hamburgers, a substitute food
b. A health report showing eating pizza reduces stress
c. A decreased interest in take-out and fast-food dining
d. An increase in the price of cheese, a complement
d. An increase in the price of cheese, a complement
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Is faster economic growth unambiguously better?
A. No, because growth has an opportunity cost. B. No, because growth serves no useful purpose. C. Yes, because more goods and services are always better. D. Yes, because it expands the production possibilities of an economy. E. Uncertain, economic growth has no answer to this question.
When income falls
A. there is a movement downward along the demand curve for an inferior good. B. the demand for an inferior goods rises. C. the demand for a normal goods rises. D. there is a movement downward along the demand curve for a normal good.
Answer the following statements true (T) or false (F)
1) In a successive monopoly structure, if distributor has a constant marginal cost, the wholesale demand curve will lie below the retail marginal revenue curve. 2) Vertical integration is not an economically sound decision in a successive monopoly situation. 3) Vertical integration of a monopoly and a perfectly competitive firm does not yield greater economic profit. 4) If double marginalization exists between an upstream firm and a downstream firm, the vertical integration of the two firms will generate more economic profit. 5) The wholesale demand for a monopoly retailer depends of the retailer's marginal revenue.
Which of the following is not correct?
a. An example of adverse selection is man who tries to sell his used car without disclosing that it needs a new transmission. b. The "invisible hand" of a free market will always fix the problems of adverse selection and moral hazard. c. An employer may try to prevent a moral hazard problem by paying her workers an efficiency wage. d. One interpretation of gift giving is that it reflects asymmetric information and signaling.