The airlines industry is dominated by three firms with the following market shares: Quartz (50 percent), Modine (25 percent), and Tetran (20 percent). Which action identifies the price leader in the industry?
a. Quartz unilaterally announces that it is raising its fares.
b. Modine increases its fares after its competitors announce price hikes.
c. Modine and Tetran formally meet and announce they are increasing their fares.
d. Tetran rises its fares following a rate hike by the other firms in the industry.
a. Quartz unilaterally announces that it is raising its fares.
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The velocity of circulation grows at 1 percent and real GDP grows at 3 percent. If the quantity of money grows at 4 percent, the inflation rate is
A) 8 percent. B) 4 percent. C) zero. D) 2 percent. E) 10 percent.
If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on
A) the household price index. B) the GDP deflator. C) the producer price index. D) the consumer price index.
Which of the following sentences about the benefits of foreign investment is true?
a. Foreign investment is invited only in labor-intensive industries. b. Foreign investment has more effect on employment in developing countries. c. Most expenditures on research and development are made by the major developing countries. d. The ability of foreign firms to utilize modern technology in a developing country depends on having a supply of engineers and technical personnel in the host country. e. Foreign investment will improve balance of payments if the foreign investment is used to produce goods primarily for domestic consumption.
Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that we observe Joe staying open 3 hours per day. If he is following the marginal principle, what must his marginal cost per hour be?
A. $24 B. $32 C. $40 D. $48