Book publishers use price discrimination routinely, but the form of price discrimination they use is different from the form used by airlines and other industries. Explain
What will be an ideal response?
Some consumers in some markets are willing to pay a high price to be among the first to buy a new product. These consumers are called "early adopters." Book publishers offer new novels at high prices knowing that some consumers do not want to wait for a lower price before reading the book. Other consumers who are not early adopters will buy the novel in hardcover after time has elapsed and the novel's price is lower. Consumers who are content to wait for a paperback version of the book to be published will pay an even lower price. Publishers achieve higher profits from the books they sell by segmenting the market over time and charging a higher price to the segment with an inelastic demand (early adopters) and a lower price to the segment with a more elastic demand (paperback buyers).
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The social interest theory of regulation asserts that regulation
A) seeks an efficient use of resources. B) is aimed at keeping prices as low as possible. C) helps firms maximize economic profit. D) of a natural monopoly must be done using rate of return regulation. E) does not work for society as well as would allowing the firms freedom from regulation.
Investment spending is procyclical. In the short run, are changes in investment affected more by changes in the expected marginal product of capital, or by changes in the user cost of capital?
What will be an ideal response?
According to the median voter model, a candidate (in a two-person race) is more likely to label himself or herself a "middle-of-the-roader" than a conservative or liberal because
A) the terms "conservative" and "liberal" are offensive to many people in today's world. B) the terms "conservative" and "liberal" are considered terms used of people who are in the "wings" or "extremes" of the political distribution, and a candidate can only win an election by being perceived as closer to the center of the political distribution than his or her opponent. C) they receive better treatment by the press. D) it is customary and it has become a tradition in American politics. E) none of the above
For this question, assume that firms experience a reduction in sales. We would expect that this decrease in sales will cause
A) an increase in profit per unit of capital. B) a decrease in profit per unit of capital. C) no change in profit per unit of capital. D) ambiguous effects on profit per unit of capital. E) none of the above