A firm can signal the high quality of its product by
a. spending nothing on advertising to convey that the product is so good that the firm does not even need to advertise.
b. spending a large amount of money on advertising.
c. getting a patent for the product.
d. not worrying about getting a patent for the product.
b
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Refer to Table 9-6. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to
A) 1.2 percent. B) 2.0 percent. C) 2.5 percent. D) 4.0 percent.
If your bank faces a 20 percent required reserve ratio and receives a checkable deposit of $4,000 . it can make additional loans worth a maximum of:
a. $800. b. $3,200. c. $4,000. d. $16,000. e. $20,000.
To circumvent the problem of double marginalization:
A. transfer prices must be set that maximize the overall value of the firm rather than the profits of the upstream division. B. firms should vertically integrate. C. firms should engage in two-part pricing, unless it is possible to engage in either first-or second-degree price discrimination. D. None of the answers are correct.
A major distinction between a monopolistically competitive firm and an oligopolistic firm is that:
A. one necessarily faces a downward-sloping demand curve and the other a horizontal demand curve. B. one always produces differentiated products and the other always produces a homogeneous product. C. one is a price taker and the other is a price maker. D. a recognized interdependence exists between firms in one industry but not in the other.