Related to the Economics in Practice on page 318: A company selling iced tea discovers that as sugar is added to tea, customers' opinions of the taste of the tea rises for the first few grams of sugar and then drops. Even so, the company chooses not to add the amount sugar that would result in the best-tasting tea. Which of the following would explain why adding less sugar could be a wise decision?
A. Many products in the cold drink market are sold with substitutes for sugar, such as high fructose corn syrup.
B. Manufacturers of tea are required to clearly indicate the amount of sugar in their products.
C. The price of sugar added to tea is much less significant than the price of other ingredients, such as tea leaves.
D. Teas with less sugar are more likely to appeal to health-conscious consumers.
Answer: D
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When economists say wages are "sticky," they mean that they:
A. are slow to adjust to changes in the economy, and can cause unemployment. B. stick to current market trends, and adjust to equilibrium when changes in the economy occur. C. get stuck behind current market trends, and follow a typical two-week lag with changes in the economy. D. lead market trends, and other variables will stick to the wage rate and follow it closely.
If labor demand rises faster than labor supply, it is expected that real wages will ____
a. stay the same b. decrease c. increase d. Not enough information is available to determine the impact on real wage rates.
The difference, in terms of economic goals, between developing countries and developed countries is that:
A. developing countries focus primarily on achieving an equitable distribution of income, while developed countries focus on higher economic growth rates. B. there are no differences between the economic goals of developing and developed countries. C. developing countries focus primarily on achieving economic stability, while developed countries focus on an acceptable growth rate. D. developing countries focus primarily on meeting basic needs, while developed countries focus on economic stability.
Goods produced for the purpose of producing other goods are known as
A. Services. B. Consumption goods. C. Investment goods. D. Exports.