In the case of Matsushita v. Zenith, the fact that the foreign television manufacturers were able to charge lower prices than their domestic competitors in the U.S. market for televisions was sufficient evidence to conclude that the Japanese firms were engaged in predatory pricing. Indicate whether the statement is true or false ANSWER FALSE
Stock market wealth decreases. What is the impact on aggregate expenditures and income? A) Both increase. B) Both decrease. C) Aggregate expenditure increases and income decreases. D) Aggregate expenditure decreases and income increases. ANSWER B
When calculating the arc elasticity of demand, the percentage change in price (quantity) should be based on the average of the starting and ending prices (quantities). Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements is correct? A) A change in demand or supply can only be caused by a change in price. B) A simultaneous decrease in demand and increase in supply will result in an increase in equilibrium price and uncertain effect on quantity. C) If price is currently above equilibrium, market adjustments […]
A predatory pricing strategy will have the greatest chance of success when the predatory price is set below the cost of the firm’s competitors, new rivals are unlikely to enter after the strategy ends, and profits can be recouped in a relatively short period of time. Indicate whether the statement is true or false […]
Assume the supply function for good X can be written as Qs = -100 + 27Px – 5Py – 1.8W, where Px = the price of X, Py = the price of good Y, and W = Wage index for workers in industry X. According to this equation: A) X and Y are substitutes in […]
The U.S. dollar appreciates against the euro. What is the impact on aggregate expenditures and income? A) Both increase. B) Both decrease. C) Aggregate expenditure increases and income decreases. D) Aggregate expenditure decreases and income increases. ANSWER B
X-inefficiency refers to the situation in which firms with market power are operating in the upward-sloping segment of their long-run average cost curve. Indicate whether the statement is true or false ANSWER FALSE
All else held constant, an increase in foreign imports of cameras would cause the supply of cameras in the United States to: A) increase. B) stay the same. C) decrease. D) cannot be determined with the information given. ANSWER A
Assume that in an effort to discourage competitors, firm X has lowered its price below its average total costs of production. This is an illustration of the limit pricing form of strategic entry deterrence. Indicate whether the statement is true or false ANSWER FALSE
