Perfect Shots is company specializing in wedding photos and they have a fixed advertising budget. Perfect Shots advertises on the radio and the television and it costs $5,000 per unit of radio advertising and $15,000 per unit of television advertising. At their current advertising levels, the marginal benefit from radio advertising is $5,800 and the marginal benefit from television advertising is
$14,250. To optimally allocate their advertising budget, Perfect Shots should ________.
A) increase the amount of advertising in radio and television
B) increase the amount of advertising in radio and decrease the amount of advertising in television
C) decrease the amount of advertising in radio and television
D) decrease the amount of advertising in radio and increase the amount of advertising in television
B) increase the amount of advertising in radio and decrease the amount of advertising in television
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To determine who bears the greater share of a tax, we compare the
A) number of buyers to the number of sellers. B) elasticity of supply to the elasticity of demand. C) size of the tax to the price of the good. D) government tax revenue to the revenue collected by the suppliers. E) pre-tax quantity to the post-tax quantity.
When two variables in a graph are related to a third, changing the third causes
A) a movement along the curve. B) a shift of the curve. C) no change in the curve because the third variable isn't on the axes. D) either a shift or a movement in the curve, but more information is needed to determine which occurs. E) None of the above answers is correct.
According to the wealth effect, if real wealth decreases then people
A) decrease their consumption expenditure. B) increase their consumption expenditure. C) do not respond if their nominal wealth does not change. D) decrease their consumption expenditure only if their nominal wealth also decreases.
Fiscal policies are different from monetary policies because:
a. Fiscal policies affect only aggregate supply and monetary policies affect only aggregate demand. b. Fiscal policies affect only aggregate demand and monetary policies affect only aggregate supply. c. Fiscal policies are enacted by central banks and monetary policies are enacted by Congress or Parliament. d. Fiscal policies are mainly concerned with changing government spending and taxation, and monetary policies are mainly concerned with changing the money supply.