For each of the following pairs of products state which are complements, which are
substitutes, and which are unrelated.
a. Blu-ray discs and video-on-demand
b. Fiat 500 and Mini Cooper S
c. Toothpaste and toothbrush
d. Popcorn and snowboards
e. Razors and razor blades
________ describes the actions a firm takes to maintain the differentiation of its product
over time.
A) Product differentiation.
B) Brand management
C) Aggressive marketing.
D) Advertising
Each of the following is one of the four main categories of spending identified by John
Maynard Keynes except
A) consumption.
B) net exports.
C) government purchases.
D) taxes.
A decrease in aggregate demand results in a(n) ________ in the ________.
A) recession; long run
B) expansion; long run
C) expansion; short run
D) recession; short run
Cost-price pricing typically does not result in profit-maximization. As a result,
economists have two views of cost-plus pricing. One of these views is
A) cost-plus pricing is more likely to lead to profit-maximization for large firms than
for small firms.
B) cost-plus pricing is a good way to approximate the profit-maximizing price when
marginal revenue or marginal cost is difficult to determine.
C) cost-plus pricing is more likely to lead to profit-maximization for monopolistically
competitive firms than for oligopoly firms.
D) cost-plus pricing is more likely to result in profit-maximization the more elastic the
firm’s demand curve is.
Which of the following would cause both the equilibrium price and equilibrium
quantity of potatoes (assume that potatoes are an inferior good) to decrease?
A) an increase in consumer income
B) a freeze that sharply reduces potato output
C) a decrease in consumer income
D) a technological advancement that results in a bumper crop of potatoes
Gross domestic product in the economy is measured by the
A) total number of goods and services produced in the economy.
B) dollar value of all final goods and services produced in the economy.
C) total number of goods produced in the economy.
D) total number of services produced in the economy.
Globalization is defined as the process of countries becoming ________ open to foreign
trade and ________ open to foreign investment.
A) more; less
B) more; more
C) less; more
D) less; less
Table 17-5
Oil Can Harry’s, a new automobile service shop, is ready to start hiring. The table above
shows the relationship between the number of mechanics the firm hires and the quantity
of oil changes it produces.
a. Suppose the price of an oil change is $20. Complete the table by filling in the values
for marginal product and marginal revenue product.
b. Oil Can Harry’s is an input price-taker. Suppose the wage paid to mechanics is $80
per day. What is the profit-maximizing number of mechanics?
c. Suppose the wage rate rises to $100 per day.
(i) What happens to the firm’s demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?
d. Suppose the wage rate is $60 per day and the price of haircuts is now $15.
(i) What happens to the firm’s demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?
The five most important variables that determine the level of ________ are disposable
income, wealth, expected future income, price level, and interest rate.
A) consumption
B) government purchases
C) planned investment
D) net exports
Figure 18-6
Figure 18-6 shows the Lorenz
curves for Islandia and Syldavia.
If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for
Islandia.
A) 0.41
B) 0.45
C) 0.70
D) 0.76