P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below.
P-TV will air a sitcom:
A. never.
B. no matter what QRS-TV does.
C. only if QRS-TV is also airing a sitcom.
D. only if QRS-TV is airing a reality show.
Answer: A
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An economic model suggests that an additional year of education increases a student's future wages by 15 percent. Using this model, answer the following questions:
a) Gary completes 8 years of education, and John completes 9 years of education. If Gary earns $20 per hour, how much is John expected to earn? b) John completes 9 years of education, and Kevin completes 12 years of education. Given John's earnings [as calculated in a)], how much is Kevin expected to earn? c) Is there any limitation to such a model? Explain your answer.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue it is assuming that the demand for attending the school is
A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic.
As existing firms exit an increasing-cost industry
A. the position of the LRAC curve doesn't change, but firms move up their LRAC curve. B. the LRAC curve shifts up. C. the LRAC curve shifts down. D. the position of the LRAC curve doesn't change, but firms move down their LRAC curve.