The objective of creating a brand name is:
a. to reduce the price of the product.
b. to ensure a steady supply of the good in the market.
c. to reduce the price elasticity of demand.
d. to reduce the cost of production of the firm.
e. to attract rival firms into the market.
QUESTION 2A person has a comparative advantage in producing a good if that person:
a. can produce the good at a lower absolute cost than anyone else.
b. can produce the good at a lower opportunity cost than anyone else.
c. can do a better job than anyone else.
d. spends more money in out-of-pocket expenses than anyone else.
e. can produce the good at a higher opportunity cost than anyone else.
QUESTION 3A consumer becomes loyal to a product when:
a. the good is available at a very low price.
b. the product is as good as its substitutes.
c. the product comes with a gift occasionally.
d. he/she has had a positive experience with that good.
e. discounts are offered periodically.
QUESTION 4People:
a. tend to specialize in those activities in which their opportunity costs are minimum
b. tend to specialize in those activities in which their opportunity costs are maximum.
c. never consider opportunity costs while deciding which activities to specialize in.
d. consider only direct costs while deciding which activities to specialize in.
e. do not behave in their own self-interest.
QUESTION 5Because of their brand names, Kodak, IBM, Honda, Daimler-Chrysler, and other well-known firms are able to charge significantly higher prices for their products than their competitors without losing any business. Expenditures made by firms to create brand names:
a. are always inefficient.
b. provide reliability to consumers.
c. lead to monopolies.
d. necessarily lead to deadweight losses.
e. would not exist if information was less costly for firms to obtain than consumers.
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