Price discrimination requires:
A. a firm to be a competitive firm.
B. a firm to be able to segment its customers based on different price elasticities of demand.
C. arbitrage.
D. that the product can be easily resold.
Answer: B
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The term that is used to refer to a situation in which one party to a transaction has more or better information than the other party is
A) adverse selection. B) asymmetric information. C) moral hazard. D) deceptive trade practices.
If the price of gasoline increases and the price of food remains the same, then real income measured in terms of
A) gasoline increases. B) gasoline decreases. C) food increases. D) food decreases.
Distinguish economies and diseconomies of scale. How can the extent to which economies and diseconomies of scale explain the size and number of real world firms in an industry?
All of the following are true regarding flexible exchange rates except
A. Exchange rate movements alter relative prices and may disrupt import and export flows. B. The quantity of foreign exchange demanded equals the quantity supplied. C. Some people are hurt while others are helped by exchange rate movements. D. Speculators typically push exchange rates away from the long-term equilibrium.