1 From 1970 to 2010 the real price of a college education in

1. From 1970 to 2010, the real price of a college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment?

A) A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education.

B) A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education.

C) A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education.

D) none of the above

Please provide the reason why you chose that option not others

2. Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if:

A) your pricing policy should not depend on the number of close substitute products.

B) there are no close substitutes for your product.

C) there are lots of other firms selling closely related products in your market.

D) none of the above

Please provide the reason why you chose that option not others

3. Which of the following is a normative statement?

A) Presidential candidates should not be given funds from the federal government to run campaigns.

B) The sea otter should not be allowed to spread into Southern California coastal waters, because it will reduce the value of fisheries.

C) The taxes paid by the poor should be reduced in order to improve the income distribution in the U.S.

D) State governments should not subsidize corporations by training welfare recipients.

E) all of the above

Please provide the reason

Solution

Ans:

1) Option A

A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education.

The increase in the price could have caused by left ward shift in the supply curve for college education.This is because when the supply curve shifts to the left, price increases.

The increase in the total enrollment could have caused the right ward shift in the demand curve for college education.when the total enrollment increases the demand curve will shift to the right.

2) Option B

there are no close substitutes for your product.

The pricing strategy of a company considers various factors such as input costs,traget margins,competitors actions and market conditions in deciding the price for the products.The ability to independently set prices increases when there are no close substitutes for your product.

3) Option E

all of the above

A normative statement reflects value judgement and it can not be tested since it is not a statement of fact.