For an information product, why is a profit-maximizing firm unable to practice marginal cost pricing? How is its price determined in the long run?
What will be an ideal response?
An information product has the characteristics of high fixed costs, low marginal costs, and a short-run downward sloping average total cost curve. As a result, marginal cost pricing will result in economic losses. In the long run, the firm's price equals average total cost. Thus, the firm charges a price that covers its average total cost and earns zero economic profits in the long run.
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What are the constraints that a firm faces? How does each constraint limit the firm's profit?
What will be an ideal response?
If a book publishing company sells its books to retailers with the explicit condition that the retailers may not resell the books below a specified price, this is an example of ________ and it ________ illegal per se.
A) resale price maintenance; is not B) price fixing; is not C) resale price maintenance; is D) price fixing; is
The basic difference between government spending on public goods and government transfer payments is that spending
a. on public goods reallocates resources between the public and private sectors, while spending on transfer payments does not b. on transfer payments reallocates resources from the private to the public sector, while spending on public goods does not c. on public goods reallocates resources between the public and private sectors, while transfer payments reallocate resources from the public to the private sector d. on public goods reallocates resources between different levels of government spending, while spending on transfer payments reallocates resources from the privatesector to the public sector e. on public goods reallocates resource from the private to the public sector, while spending on transfer payments reallocates resources from the federal government tostate governments
Appreciation of the British pound will
A. make Britain's exports less expensive and her imports more expensive. B. make Britain's exports more expensive and her imports less expensive. C. make Britain's exports and imports both more expensive. D. make Britain's exports and imports both less expensive.