The cross-price elasticity of demand measures how sensitive purchases of a specific product are to changes in
A. the price of that same product.
B. the price of some other product.
C. the general price level.
D. income.
Answer: B
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If total fixed cost increases, which of the following will NOT change?
A) total cost B) average fixed cost C) marginal cost D) average total cost E) ALL costs increase when total fixed cost increases.
Suppose you need an estimate of future inflation (to decide, for example, whether a particular security is a good investment). How might you formulate a rational expectation?
What will be an ideal response?
A payday loan company has decided to open several new locations in the city. To decide where to open these locations it hires consultants and pays them per store opened. At the end of the quarter, the company notices a many of the new stores' sales volume fail to meet expectations. To incentivize the consultants to instead focus on opening profitable stores, the company decided to alter the
compensation to a percentage of the profit earned per new store. This puts the consultants a. In a less risky position b. A more risky position c. In risk neutral position d. None of the above
Figure 11-6
The industry described in Figure 11-6
A. is not a natural monopoly because no firm would produce in the long run unless the government intervened in the market. B. is not a natural monopoly because the average total cost curve is U shaped. C. is a natural monopoly because the economic profit is positive for a monopolist if the government doesn’t intervene. D. is a natural monopoly because price is less than average total cost at the output that would be produced by the industry under perfect competition.