Q. 5. For auto makers, an important decision is to determine what features a new car model should be provided based on cost-benefit analysis. In what ways can economists help auto manu- facturers estimate the marginal rate of substitution between features such as vehicle interior size and acceleration? (a) Examining production cost data (b) Conducting consumer surveys about willingness to pay for auto features (c) Solving the standard consumer model (d) Statistically analyzing historical data on purchases of different types of autos (e) B and D only
Q. 5. For auto makers, an important decision is to determine what features a new car model should be provided based on cost-benefit analysis. In what ways can economists help auto manu- facturers estimate the marginal rate of substitution between features such as vehicle interior size and acceleration?
(a) Examining production cost data
(b) Conducting consumer surveys about willingness to pay for auto features
(c) Solving the standard consumer model
(d) Statistically analyzing historical data on purchases of different types of autos
(e) B and D only
Q. 10. When firms determine whether to invest in research and development (R&D), they need to consider many factors. Which of the following is NOT one of the important factors that should be considered?
(a) The market size of the product today.
(b) The market potential for the product in the next few years.
(c) The R&D investment of the competitors on similar products.
(d) Potential new products that may be substitutes of the product. The costs of R&D and the probability of having a successful innovation.
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