Suppose you were a consultant to General Motors and were concerned with the fact that although demand is great today, GM may do poorly in the future because competition from foreign producers is growing and there is no indication it will stop. What would be a wise strategy now for you to address this concern? Advise GM that it should
a. seek a conglomerate merger with some other firm or group of firms
b. build larger plant capacity to increase your market share
c. create more brands (car models) in order to price discriminate
d. cut price to establish brand loyalty
e. seek a vertical merger with some other firm or group of firms
A
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Explain the concept of efficiency as it relates to taxation
An increase in total factor productivity could be the result of
A) adverse weather. B) the addition of new machinery. C) new hires. D) the introduction of new manufacturing methods.
Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P) and each consumer has the same demand. Big Waves has a constant marginal cost of $5 per consumer. If Big Waves practices two-part pricing and requires a membership fee and then a separate entrance fee, what is the profit-maximizing entrance fee?
A) $200 B) $10 C) $5 D) $50
In the long run when a perfectly competitive firm experiences negative economic profits,
A) firms exit the industry, the market supply curve shifts rightward, and the market price falls. B) firms enter the industry, the market supply curve shifts rightward, and the market price falls. C) firms exit the industry, the market supply curve shifts leftward, and the market price rises. D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.