Automobile manufacturers commonly sell new car models at the full suggested retail price during the first few years the car is on the market, and they do not offer rebates or discounts
After the initial sales period, the manufacturers typically offer rebates or discounts on these models. The marginal cost of manufacturing the cars is constant across time. Which of the following statements is true? A) The firms practice peak-load pricing by charging a higher price in the initial sales period.
B) Early buyers have higher reservation prices for the new models, and the manufacturers maximize profits by charging these buyers a higher price.
C) The marginal revenue from buyers who purchase these cars after the initial sales period must be lower that the marginal revenue from early buyers.
D) To maximize profits, the firms equate the buyers' reservation prices across time.
B
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Refer to Figure 17-1. Suppose that the economy is currently at point A, and the unemployment rate at A is the natural rate. What policy would the Federal Reserve pursue if it wanted the economy to move to point B in the long run?
A) Sell treasury bills. B) Raise the discount rate. C) Decrease the money supply. D) Buy treasury bills. E) No policy will move the economy to point B in the long run.
At the XYZ Co, a unit of capital costs three times as much as a unit of labor. If the isoquants are convex, and the firm does not change its input mix in the long run, we can conclude that
A) MPK = 3 ? MPL . B) the firm will not hire any capital. C) the firm will hire 3 times as much labor as capital. D) the firm will hire 3 times as much capital as labor.