Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $4 when one pays full price (around $10) for the first pizza. Why not simply charge $7 a pizza instead?
The second pizza gives less marginal utility than the first. The companies are trying to charge a high price for the first pizza, which gives high marginal utility, and get customers to buy that second pizza, with relatively low marginal utility, by charging a price that reflects the lower MU. At $7 apiece, the companies might lose selling the second pizza and be worse off than selling two pizzas at an average price of $7.
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Which of the following statements is true?
A) The supply of oil is perfectly inelastic; therefore, as the demand for oil increases over time the price of oil increases significantly. B) The supply of oil is very inelastic over short time periods but becomes more elastic over time. A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. C) Over short periods of time increases in the demand for oil are greater than increases in the supply of oil. Over the long run increases in the demand and the supply of oil are about equal. As a result, the price of oil increases greatly in the short run but is stable in the long run. D) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time. A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic.
To calculate the Herfindahl index,
a. add the market shares of all firms in an industry b. add the market shares of any four firms in an industry and then square them c. add the market shares of the four largest firms in an industry d. square the market shares of all firms in an industry and then add them e. square the market shares of the four largest firms in an industry and then add them
In 2009, the United States largest balance of trade deficit was with
a. the European Union b. Canada c. China d. Mexico e. Brazil
Institutional barriers that impede human and physical capital investment are known as
A. The human capital effect. B. An illiteracy trap. C. The discouraged worker gap. D. An inequality trap.