Spending a lot on advertising:
A. can act as a credible signal to consumers of high-quality products.
B. does not serve as a credible signal to consumers, since any producer can do it.
C. can act as a credible signal to producers to create high quality substitutes.
D. can act as a credible signal to consumers of low-quality products.
Answer: A
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The return to monopsony power refers to the
a. difference between the marginal revenue product and the wage rate of the last worker hired multiplied by the number of workers employed b. fact that the marginal cost of labor for a monopsony is lower than the wage rate c. wage rate minus the marginal revenue product d. higher marginal revenue product of labor that a worker produces under monopsony e. fact that a monopsonist can choose both the wage rate and the number of workers hired simultaneously
The marginal productivity principle says that a profit-maximizing firm should
a. hire capital until its marginal product is zero. b. hire labor until another worker costs more to hire than he can earn for the firm. c. hire the quantities of capital and of labor at which their marginal products are equal. d. hire capital until its marginal product is negative.
Calculate the expected value of an investment that has the following payoff frequency: a quarter of the time it will pay $2,000, half of the time it will pay $1,000 and the remaining time it will pay $0.
What will be an ideal response?
Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:
A. should close down in the short run. B. is maximizing its profits. C. is realizing a loss of $60. D. is realizing an economic profit of $40.