Suppose that a retailer sells 500 six-packs of Dr. Pepper per day at $3.50/six-pack. Also, suppose that the cross-price elasticity between Dr. Pepper and Pepsi is 0.6. If the retailer lowers the price of Pepsi from $4.00 to $3.60/six-pack, what is the
percentage change in the price of Pepsi?
A) 10% increase B) 10% decrease C) 6% decrease D) 6% increase
Answer: B
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Even when the Obama administration succeeds with its effort to gain Congressional approval for its stimulus proposals, it will still take time for these policies to actually work. The time it takes for these policies to work is known as
A) automatic stabilization. B) crowding out. C) inside lags. D) outside lags.
Managerial economics is best defined as
A) the study of economics by managers. B) the study of the aggregate economic activity. C) the study of how managers make decisions about the use of scarce resources. D) All of the above are good definitions.
Although the long-run equilibrium price of oil is $80 per barrel, some producers have much lower costs because their oil reserves are relatively close to the surface and are easier to extract
If the low-cost producers have a minimum LAC equal to $20 per barrel, then the difference ($60 per barrel) is: A) an above-normal economic profit. B) an economic rent due to the scarcity of low-cost oil reserves. C) a profit that will go to zero as new oil producers enter the market. D) none of the above
It is difficult to engage in long-term financial planning when inflation is:
A. high and erratic. B. low and stable. C. predictable. D. accounted for through indexing.