A firm started promoting its product through advertising. This changed the product's elasticity ...

A firm started promoting its product through advertising. This changed the product's elasticity from -1.08 to -0.99 . The firm should
 a. Lower prices as the demand is more elastic
  b. Lower prices as the demand is more inelastic
  c. Raise prices as the demand is more elastic
  d. Raise prices as the demand is more inelastic

QUESTION 2

Suppose that at current consumption levels an individual's marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2 . Then the MRS (of soft drinks for hot dogs)that is, the number of hot dogs the individual is willing to give up to get one more soft drinkis:
 a. 5.
  b. 2.
  c. 1/2.
  d. 1/5.

QUESTION 3

Under asymmetric information,
 a. you never get what you pay for
  b. you sometimes get cheated
  c. you always get cheated
  d. at best you get what you pay for
  e. sellers make profits in excess of competitive returns

QUESTION 4

The management of a rental building faces a rent control situation, where it cannot charge more than 400 a month in rent on the apartment. The management knows that the apartments are high in demand and renters would be willing to be 1000 per month for them. The management will
 a. Do nothing-it cannot violate the regulation
 b. Offer a bundle of both the apartment and furniture together for 1000
 c. Offer the controlled rent but force the tenants to rent furniture from the management
  d. Both B&C

QUESTION 5

All of the following are true, except
 a. Some consumers may infer high prices of a good to signal high quality
  b. Low prices can also signal high quality
  c. Promotional campaigns do not affect consumer's perception on quality
  d. It makes more sense to raise price when advertising makes demand less elastic

QUESTION 6

Suppose an individual's MRS (of steak for beer) is 2:1 . That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is 1 and a beer is 4 . Then in order to increase utility the individual should:
 a. buy more steak and less beer.
  b. buy more beer and less steak.
  c. continue with current consumption plans.