In what ways can expectations change your demand for a product today?
What will be an ideal response?
Expectations about both future prices and future incomes may affect your demand for a product today. For example, if you expect the price of gasoline to rise tomorrow, you will want to fill up your car's gas tank today. Also, expectations about future incomes may affect purchases today. An individual who believes that he may soon be laid off from his job (and therefore see a drop in his income) will be unlikely to purchase a new car today.
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Government water resource specialists have estimated that the Great Lakes currently contain about 200 thousand tons of pesticide pollutants, the amount of new pesticide pollutants that enter the lakes are about 20 thousand tons per year, and the
stock of pesticide pollutants was about 200 thousand tons last year. Based on this information, what is the stock dissipation rate? A) Zero B) 5 percent C) 10 percent D) 20 percent
The seller of an existing house claims that it is in great shape, and he is offering a 2-year warranty on the house. His statements about the quality of his house are likely to be:
A. overstated. B. true because offering a warranty is a costly-to-fake signal. C. credible even in the absence of a warranty. D. untrue because otherwise he would not offer the warranty.