Which of the following will cause a decrease in producer surplus?
a. the imposition of a nonbinding price ceiling in the market
b. buyers expect the price of a good to be higher next month
c. the price of a substitute increases
d. income increases and buyers consider the good to be inferior
d
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Refer to Table 14-4. If Alistair assumes that Baine would increase its advertising budget, what should it do?
A) Alistair should not change its advertising budget. B) Alistair should keep its own budget the same and allow Baine to incur the higher cost. C) Being a duopolist, Alistair is not affected by Baine's choices because it has a secure 50 percent market share. D) Alistair should also increase its advertising budget.
The case for advertising includes the fact that
A. it wastes society's scarce resources. B. firms spend large sums of money to create meaningless differences among products. C. it creates wants that otherwise would not have existed. D. it provides consumers with valuable information about product availability, quality, and price.