From Example 1.2 in the textbook, Pindyck and Rubinfeld distinguish between the mass market and dealer market for bicycles. Although there are many dealers in the U.S. and only a few mass merchandisers, we should expect the dealer market to be somewhat less competitive than the mass market. Why?
D B and C are correct.
A Due to their differences in quality and performance, dealer bicycles are not close substitutes. (A)
C Dealers are small sellers and have little control over bicycle prices.
B The geographic extent of the market for dealer bicycles is typically small, so the individual sellers do not have many local competitors. (B)
E A and B are correct.
E A and B are correct.
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What is the primary difference between a sole proprietorship and a partnership?
A) Partnerships have more owners than do proprietorships. B) Partnerships can issue stocks and bonds while proprietorships cannot. C) Proprietorships have unlimited liability while partnerships have limited liability. D) There is no real difference between the two types of firms.
Many people have heard that the stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl, and falls when a team from the American Football Conference (AFC) is victorious. If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices, you probably are: a. confusing correlation with causation
b. committing the fallacy of composition. c. confusing the direction of causality, since everyone knows that stock prices determine which team wins the Super Bowl. d. none of the above
The most likely explanation for the high inflation rates that countries like Russia and the Ukraine have suffered is that
A. large inflows of foreign funds increase the money supply, causing inflation. B. borrowing from the central bank is the most expedient method of funding the government's expenditures. C. the flood of financial innovations has increased liquidity in these nations' economies. D. without inflation, these countries would be unable to achieve high rates of growth.
Refer to the graph below. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. Demand-pull inflation in the short run can best be represented as a shift of:
A. AS1 to the right
B. AD1 to the right
C. AS1 to the left
D. AD1 to the left