Spending a lot on advertising is a credible signal because it:
A. persuades the consumer to perceive high quality of a product, even if it doesn't exist.
B. conveys the firm's confidence in the high quality of their product.
C. conveys the firm's confidence in its ability to convince the consumer to buy.
D. None of these explains why advertising can be a credible signal.
Answer: B
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When interest rates rise in the United States (with the price level fixed), the value of the dollar ________, domestic goods become ________ expensive, and net exports ________
A) falls; less; fall B) falls; more; rise C) rises; more; fall D) rises; less; fall
The production and cost information provided in the table above for Flaming Fernando's, a restaurant that sells Fiery Frijoles, is for the
A) short run because there are no variable costs. B) short run because there is a fixed cost. C) long run because there are no variable costs. D) long run because there are no fixed costs. E) short run and long run because the total cost increases as production increases.
According to ________, in a market with an externality, private parties would voluntarily negotiate an efficient outcome without government intervention
A) A. C. Pigou B) John Maynard Keynes C) Adam Smith D) Ronald Coase
Which of the following items are NOT counted in U.S. GDP?
A) your purchase of a new Ford Mustang B) your purchase of new tires for your old car C) GM's purchase of tires for new cars D) a foreign consumer's purchase of a new Ford Mustang