Question 1

Searching for the lowest price for a particular product _____

Accepted Answer

Searching for the lowest price for a particular product involves an opportunity cost because the time and effort spent on searching could have been used for other productive activities.

Question 2

A company that produces furniture wax branches out into producing a dusting product called Lemon Dust-Away.This expansion can be called efficient if the company_____

Accepted Answer

The expansion can be called efficient if the company experiences economies of scope, which means that the company is able to leverage existing resources and capabilities to create new products or services at a lower cost. In this case, the company's expertise in producing furniture wax can be applied to the production of the Lemon Dust-Away product, resulting in lower costs and higher profits.

Question 3

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is the optimal quantity of information?

Accepted Answer

The optimal quantity of information is where the marginal benefit of information equals the marginal cost of information. In this case, that quantity is represented by the point labeled I* on the graph. It is not greater than or less than I*. Therefore, the answer is C.

Question 4

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.The marginal benefit of information curve reflects that _____

Accepted Answer

The marginal benefit of information curve reflects that additional information yields less marginal benefit. As more information is gathered, the marginal benefit decreases because the additional information becomes less valuable or redundant. This is reflected in the downward sloping curve in Exhibit 14.2.

Question 5

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where does the value of additional information reach zero?

Accepted Answer

The answer of Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows...

Question 6

Most consumers consider the process of gathering information on a product or service _____

Accepted Answer

The process of gathering information on a product or service is considered nonmarket work because it involves activities outside of the market such as searching online, reading reviews, and asking for recommendations from friends and family. It is not irrational, unproductive, or costless, but rather a necessary part of the consumer decision-making process.

Question 7

If a firm experiences economies of scope,_____

Accepted Answer

Economies of scope occur when a firm can produce two or more different products at a lower cost than if those products were produced by separate firms. In this situation, the average total cost falls when the firm produces more than one kind of product, which is reflected in the correct answer choice, C.

Question 8

Reliable information is _____

Accepted Answer

Reliable information often requires significant resources to gather, analyze, and verify, making it costly for both producers and consumers. Producers need accurate information for production and market strategies, while consumers need it to make informed purchasing decisions.

Question 9

The promotional brochures for various products,computer publications,and online sites benefit consumers by _____

Accepted Answer

Promotional brochures, computer publications, and online sites make information about products more accessible and cheaper for consumers, effectively reducing the marginal cost of obtaining that information.

Question 10

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I* reflects _____

Accepted Answer

I* represents the point where the marginal benefit of information equals the marginal cost, indicating that the optimal amount of information has been obtained.

Question 11

Consumers generally consider the process of learning about the efficiency and durability of various brands of refrigerators _____

Accepted Answer

Learning about the efficiency and durability of various brands of refrigerators requires time and effort on the part of the consumer, making it a type of nonmarket work. While it is necessary for consumers to make informed purchasing decisions, it is not a vocation and is not costless, as it may involve travel, research, and time spent comparing options. It is not irrational or unproductive to research products before making a purchase.

Question 12

Which of the following is correct?

Accepted Answer

The answer of Which of the following is correct?
...

Question 13

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_f reflects _____

Accepted Answer

The answer of Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows...

Question 14

A firm that produces mouthwash branches out into producing toothpaste.If this expansion reduces its average cost of production,which of the following can be concluded about this firm?

Accepted Answer

The firm is experiencing economies of scope, which means that by producing another related product (toothpaste), it is able to reduce its average cost of production due to shared resources and synergies. Horizontal integration occurs when a firm expands by merging with or acquiring another firm in the same industry, which is not the case here. Vertical integration involves expanding into different stages of the production process and is also not applicable in this scenario. The option of not incurring any transaction cost is not relevant to the question.

Question 15

Which of the following is an example of a producer taking advantage of economies of scope?

Accepted Answer

A dairy farmer producing both cow's milk and butter is an example of economies of scope. By producing both products, the farmer is able to use the same resources (cows, land, equipment) to create multiple products, which lowers the average cost of each product.

Question 16

Exhibit 14.3
 
-Refer to Exhibit 14.3,which shows the marginal cost and the marginal benefit of information curves.The optimal level of search is shown at _____

Accepted Answer

The optimal level of search is at I2 because it is the point where the marginal cost of information equals the marginal benefit of information.

Question 17

Publications such as Consumer Reports _____

Accepted Answer

Publications like Consumer Reports provide evaluations and comparisons of products and services, thereby increasing the amount of information available to consumers. This helps consumers make more informed decisions, effectively increasing the optimal amount of information gathered before making a purchase.

Question 18

Exhibit 14.2
 
-Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is knowledge freely available?

Accepted Answer

Knowledge is considered freely available at the point where the marginal cost of obtaining information is zero, which is represented by the point where the marginal cost curve intersects the y-axis.

Question 19

When a multiproduct firm like General Electric (GE)spreads its outlays for research,development,and marketing over different products,per-unit costs decrease.This implies that GE is taking advantage of _____

Accepted Answer

The situation described suggests that GE is benefiting from economies of scope, which are cost advantages that arise when a firm produces multiple products that share common inputs, processes, or distribution channels. By spreading out its fixed costs across a diverse product portfolio, GE can lower its per-unit costs and achieve greater efficiency.

Question 20

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_p reflects _____

Accepted Answer

I_p reflects the point where the marginal benefit of additional information equals zero, indicating that acquiring more information does not add value.

Quiz 14: Transaction Costs, asymmetric Information, and Behavioral Economics

Searching for the lowest price for a particular product _____

A company that produces furniture wax branches out into producing a dusting product called Lemon Dust-Away.This expansion can be called efficient if the company_____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is the optimal quantity of information?

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.The marginal benefit of information curve reflects that _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where does the value of additional information reach zero?

Most consumers consider the process of gathering information on a product or service _____

If a firm experiences economies of scope,_____

Reliable information is _____

The promotional brochures for various products,computer publications,and online sites benefit consumers by _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I* reflects _____

Consumers generally consider the process of learning about the efficiency and durability of various brands of refrigerators _____

Which of the following is correct?

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_f reflects _____

A firm that produces mouthwash branches out into producing toothpaste.If this expansion reduces its average cost of production,which of the following can be concluded about this firm?

Which of the following is an example of a producer taking advantage of economies of scope?

Exhibit 14.3 -Refer to Exhibit 14.3,which shows the marginal cost and the marginal benefit of information curves.The optimal level of search is shown at _____

Publications such as Consumer Reports _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is knowledge freely available?

When a multiproduct firm like General Electric (GE) spreads its outlays for research,development,and marketing over different products,per-unit costs decrease.This implies that GE is taking advantage of _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_p reflects _____

Quiz 14: Transaction Costs, asymmetric Information, and Behavioral Economics

Searching for the lowest price for a particular product _____

A company that produces furniture wax branches out into producing a dusting product called Lemon Dust-Away.This expansion can be called efficient if the company_____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is the optimal quantity of information?

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.The marginal benefit of information curve reflects that _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where does the value of additional information reach zero?

Most consumers consider the process of gathering information on a product or service _____

If a firm experiences economies of scope,_____

Reliable information is _____

The promotional brochures for various products,computer publications,and online sites benefit consumers by _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I* reflects _____

Consumers generally consider the process of learning about the efficiency and durability of various brands of refrigerators _____

Which of the following is correct?

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.If reflects _____

A firm that produces mouthwash branches out into producing toothpaste.If this expansion reduces its average cost of production,which of the following can be concluded about this firm?

Which of the following is an example of a producer taking advantage of economies of scope?

Exhibit 14.3 -Refer to Exhibit 14.3,which shows the marginal cost and the marginal benefit of information curves.The optimal level of search is shown at _____

Publications such as Consumer Reports _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Where is knowledge freely available?

When a multiproduct firm like General Electric (GE) spreads its outlays for research,development,and marketing over different products,per-unit costs decrease.This implies that GE is taking advantage of _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.Ip reflects _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_f reflects _____

Exhibit 14.2 -Refer to Exhibit 14.2,which shows the marginal cost and the marginal benefit of information curves.I_p reflects _____