Suppose the cost of a CD is $20. As online retailers enter the market with new technology, the price of CDs ________, and traditional music stores find that ________
A) decreases; their AVC exceeds the new lower price and they exit the industry
B) decreases; their ATC curve shifts lower and their profit increases
C) increases; they compete with online retailers at the new higher price
D) increases; their costs have risen due to the new technology
E) decreases; they compete with online retailers with higher profits
A
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Use the following statements to answer this question: I. If mixed strategies are allowed, every game has at least one Nash equilibrium. II. The maximin strategy is optimal in the game of "matching pennies."
A) Both I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) Both I and II are false.
The social discount rate used in cost-benefit analysis is equal to a weighted average of the Treasury Bill rate and the long-term government borrowing rate
a. true b. false
Which of the following is a short run adjustment? a. A bakery hiring two additional bakers
b. Two new firms enter the textile industry. c. Three firms leave the bicycle industry. d. A computer hardware company builds a new factory.
One way to describe the tax multiplier is that it equals the
a. the spending multiplier b. the negative of the spending multiplier minus1.0 c. the GNP gap minus the GDP gap d. the reciprocal of the marginal propensity to consume e. the best estimate of the optimal tax rate