Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of
business because they lose customers. This story demonstrates that
a. consumers do not react to changing prices.
b. there are diseconomies of scale in retail sales.
c. there are economies of scale in retail sales.
d. there are diminishing returns to producing and selling retail goods.
c
You might also like to view...
Some people make purchases without complete information because:
A. they are irrational. B. the opportunity cost of getting more information outweighs the benefit of having more information. C. the benefit of having more information outweighs the opportunity cost of acquiring it. D. No one makes purchases without complete information.
One problem with government operation of monopolies is that
a. a benevolent government is likely to be interested in generating profits for political gain. b. monopolies typically have rising average costs. c. the government typically has little incentive to reduce costs. d. a government-regulated outcome will increase the profitability of the monopoly.
Consider an unregulated monopoly in Figure 8.13. If a second firm enters the market, the demand curve facing the first firm will:
A. shift to the right. B. shift to the left. C. remain the same. D. There is insufficient information.
Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, consumer surplus equals area(s)
A. B + C + E + F. B. A. C. A + B + C + E + F. D. A + B + C + D.