Suppose the Tidy Laundry Detergent Company, which sells 40% of all detergent, is thinking about raising its price. Before Tidy makes the change, they analyze the likely responses of the All-Clean Detergent Company, which sells 35% of all detergent, and Cheerful Detergent Company, which sells 20% of all detergent. Tidy's behavior showsÂ
A. mutual interdependence in pricing decisions.
B. nonprice competition.
C. difficult entry in oligopolies.
D. collusion.
Answer: A
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A lawsuit seeking compensation for damage from pollution
A) will ruin any chances the Coase theorem has of working to avoid the situation in the first place. B) is a substitute for bargaining, but an inefficient one. C) is a substitute for bargaining, and it can lead to the efficient solution. D) is preferable to switching the property rights between the parties. E) is how the Coase theorem was meant to work in the first place.
Commitment devices can be:
A. a way to use choice architecture to help you avoid temptation. B. formal policies or products. C. a way for people to voluntarily restrict their choices in order to make it easier to stick to plans. D. All of these statements are true.
The real exchange rate is the exchange rate that:
A. eliminates changes in exchange rates due to differences in inflation. B. would exist if there were no government intervention in the market. C. a person actually pays after the mark-up charged by the bank is included. D. would exist if there were no currency speculation.
An overvalued currency can be maintained:
A. even in the face of prolonged speculative attacks. B. only until international reserves are exhausted. C. as long as the government is willing to defend the currency. D. indefinitely.