The price of a PC falls or the price of an MP3 download rises? (Draw the diagrams!)
What will be an ideal response?
A fall in the price of a PC decreases the demand for MP3 players because a PC is a substitute for an MP3 player. The demand curve for MP3 players shifts leftward. Supply remains unchanged. The price of an MP3 player falls and the quantity of MP3 players decreases.
A rise in the price of an MP3 download decreases the demand for MP3 players because an MP3 download is a complement of an MP3 player. The demand curve for MP3 players shifts leftward. Supply remains unchanged. The price of an MP3 player falls and the quantity of MP3 players decreases.
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Bank capital has both benefits and costs for the bank owners. Higher bank capital ________ the likelihood of bankruptcy, but higher bank capital ________ the return on equity for a given return on assets
A) reduces; reduces B) increases; increases C) reduces; increases D) increases; reduces
What is multicollinearity? In general, how would you know if you had a problem with multicollinearity, and how could you correct it?
What will be an ideal response?