Firms are better off using rebates rather than just lowering the price of a good because
A) people view the firm in a positive light because now poorer people will be able to afford their good.
B) customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price.
C) only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price.
D) lowering the price is inefficient and creates additional deadweight loss.
C
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What will be an ideal response?
If a bushel of corn sells for $2 in the United States and for 4,000 COP (Colombian peso) in Colombia, and if 1 dollar is worth 2,200 COP, then:
a. the corn is 400 COP more expensive in Colombia. b. the corn is 400 COP cheaper in Colombia. c. the price of a bushel of corn equals $2 in both the United States and Colombia. d. the price of corn is 4,000 COP lower in Colombia than in the United States. e. the price of corn is $0.20 lower in the United States than in Colombia.
Most of the countries in the world suffered long and deep losses of output and employment between 1930 and 1935, which in turn meant fewer purchases of U.S. goods and services. Which of the following indicates the appropriate change in the U.S. economy?
A. Aggregate demand shifted to the left B. Aggregate demand shifted to the right C. The economy moved up along the aggregate demand curve D. The economy moved down along the aggregate demand curve
During the last decade, the United States ran the largest trade deficits in its history. These trade deficits imply:
A. a U.S. balance of payments equilibrium. B. a U.S. balance of payments deficit. C. nothing about the overall U.S. balance of payments. D. a U.S. private balance of payments surplus.