Rational inattention refers to ________
A) the risk a firm runs when they do not pay attention to their customers
B) firms making infrequent price decisions because of the time and effort those decision require
C) the cost to the firm of losing sales from alienating customers
D) all of the above
E) none of the above
B
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If consumers cannot readily switch to a close substitute when the price of a good increases, the demand for that good is likely to be:
A. unit elastic. B. perfectly elastic. C. inelastic. D. elastic.
Which of the following suggests that a competitive firm earns zero economic profits?
A) P = MC > ATC B) P > MC = ATC C) P = MC = ATC D) P > MC > ATC
In a perfectly competitive labor market, the wage rate paid by the individual firm is
A) the equilibrium market wage rate. B) dependent on the demand for the product. C) below the equilibrium market wage rate. D) a function of the tax system.
Luke is a retailer who has limited display space that he must use to optimal effect. As he designs his cola display, he keeps in mind that a new tax is about to be added to cola products. If his store reflects the overall market, how should this knowledge influence his display?
a. He should make the display larger because more cola will be sold. b. He should leave his display the same size because the same amount of cola will be sold. c. He should make the display smaller because less cola will be sold. d. He should remove the display because cola can no longer be sold.