Old Navy has a discount store in a rundown neighborhood and charges about half what they charge for the same merchandise in a more fashionable neighborhood. The best explanation for why they charge less in the rundown neighborhood is that

A. they pay less rent.
B. their customers can't afford to pay any more.
C. they don't have to bother advertising.
D. they are maximizing their profits at the prices they are charging.


D. they are maximizing their profits at the prices they are charging.

Economics

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Increases in real GDP would overstate the increase in the well-being of a country over time if, over that time period, the

A) price level increased. B) amount of pollution decreased. C) crime rate decreased. D) average hours worked per week increased.

Economics

Refer to Figure 3.2. At any consumption bundle with the quantity of good X exceeding the quantity of good Y (that is, a bundle located below the 45 degree line, like point A), Alvin's marginal rate of substitution of good X for good Y is

A) diminishing. B) positive. C) constant and positive. D) zero.

Economics

With the self-correcting mechanism, if a negative demand shock occurs,

a. a decrease in wage rates will lead to a decrease in the price level so that the economy returns to full employment b. the price level will increase, causing equilibrium GDP to return to its original level c. the wage rate will eventually increase, restoring GDP to its full-employment level d. the price level will remain constant e. there will be no effect in the long run

Economics

In making a production decision, a business owner:

A.) Decides whether to enter or exit the market. B.) Makes a long-run decision about output and revenues. C.) Decides whether to buy or lease new plant and equipment. D.) Decides the short-run rate of output.

Economics