Joe's search costs are $5 per search. He wants to buy a video player for his wife for Christmas, and the lowest price he's found so far is $300. Joe thinks 80 percent of the stores charge $300 for video players and 20 percent charge $200. Joe's optimal decision is to:
A. stop searching and purchase a video player for $200.
B. continue to search for a lower price since the expected benefit of an additional search is $80, which exceeds his per-unit search costs.
C. continue to search for a lower price since the expected benefit of an additional search is $20, which exceeds his per-unit search costs.
D. None of the statements is correct.
Answer: C
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Elite Astin-Martin Cars offers its customers a fancy showroom and a knowledgeable sales force. If Astin-Martins Are Us opens an outlet nearby, offering cut rate prices and little service, then Elite Astin-Martin Cars will likely find
a. more customers attracted to buying Astin-Martins and its sales will increase. b. more customers visiting its showroom, but lower sales. c. fewer customers visiting its showroom and lower sales. d. fewer customers visiting its showroom but more of them making a purchase.
Economic theory assumes people will not do what is in the interest of all unless it is in the interest of
A) each. B) humanity. C) the government. D) the public. E) their own pocketbooks.
The steeper the slope of the total product curve, the
A) larger is the marginal product of labor. B) smaller is the marginal product of labor. C) higher is the level of the total cost curve. D) more efficient is the technology employed.
U.S. auto sales took a beating in September 2008 as the nation's worsening economy turned dealer showrooms into ghost towns
Automakers reported a sharp drop-off in sales in the last ten days of the month as news of bank failures and a stock market meltdown increased economic uncertainty. What type of constraint do the automakers face when there is increased economic uncertainty? A) information constraint B) technology constraint C) marketmconstraint D) price constraint