If the demand for computers increases as consumers' incomes rise, then computers are:
A. a normal good.
B. a complementary good.
C. an inferior good.
D. a substitute good.
Answer: A
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According to the signaling theory of advertising, consumers
a. pay little or no attention to which firms advertise and which firms do not advertise. b. are often more impressed by a firm's willingness to spend money on advertising than they are by the content of the advertisement. c. are often more impressed by low-cost advertisements than they are by high-cost advertisements. d. gain little or no information about product quality from advertisements.
When a perfectly competitive firm weighs price and marginal cost and no externalities exist, it is weighing the ________ benefits to society of additional production against the ________ costs to society of that production.
A. marginal; marginal B. full; full C. marginal; full D. full; marginal