An increase in the price of laptop memory chips causes the price for laptops _____________ and the quantity supplied for laptops ____________.
a. Increase; increase
b. Increase; decrease
c. Decrease; increase
d. Decrease, decrease
QUESTION 2You experiment by offering free warranties for your product in market A but not in market B. Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430 . The Difference-in-difference estimate of the effect of the free warranty is:
a. 80 units
b. 100 units
c. 120 units
d. 140 units
QUESTION 3The law of supply states that, holding other factors constant, as price increases
a. Quantity supplied increases
b. Quantity supplied decreases
c. Quantity demanded increases
d. Quantity demanded decreases
QUESTION 4You raise your product price by 10 in market A but leave it unchanged in market B. Sales in A fall from 840 to 740 units per week while sales in B rise from 770 to 790 units. The Difference-in-difference estimate of the effect of the price change is:
a. 80 units
b. 100 units
c. 120 units
d. 140 units
QUESTION 5Peter's Pizzeria sells both pizzas and wings. It wants to increase the sales of its pizzas. Assuming that the pizza and the wings are complements, which of these strategies can it employ?
a. Increase the price of the wings
b. Decrease the price of the wings
c. Increase the quality of the pizza
d. Both B & C
QUESTION 6You expect one-third of your customers to be high value, willing to pay 9 for your product, and the other two-thirds to be low value customers willing to pay only 3 . You cannot tell them apart. If the product costs 3, and you charge 9, what is your expected profit?
a. 1
b. 2
c. 3
d. 4
QUESTION 7Firm X owns both tea and coffee plantations. It sells directly to the public. If the firm wants to increase the sales for the coffee, assuming that tea and coffee are substitutes, which of these strategies can it employ?
a. Increase the price for the tea
b. Offer free expedited shipping on the coffee
c. Advertise the tea more heavily
d. Both A&B
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