Suppose a survey is taken concerning car safety. According to the survey, people strongly desire safer cars and indicate they are willing to pay substantially more for safer cars
Using this information, one auto firm adds numerous safety features to its car, raising the price by several thousand dollars. Sales drop sharply, and the firm loses profits. What went wrong?
The automaker was relying on what people say rather than on what they do. An economic model would have tried to predict whether the expected gains from driving safer cars would have been great enough for consumers to pay the higher price. Economic models are models of behavior and not models about how people think or whether people's views directly affect their actions. Also, they did not account for other factors
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Which category of consumption spending tends to be the most stable over the business cycle? a. Nondurable consumer goods
b. Durable consumer goods. c. Services. d. all of these categories of consumer spending are highly unstable over the business cycle.
________: level of output at which average total costs equal average revenue or market price
Fill in the blank(s) with correct word