A firm charges a price so low that it prevents other firms from entering the market. This is an example of:
A. a tying contract.
B. limit pricing.
C. price discrimination.
D. predatory pricing.
Answer: B
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Refer to the table above. What is the average fixed cost of producing 110 units of the good?
A) $1.36 B) $1.72 C) $37.50 D) $150
Correcting a market with an externality through taxation creates ___________ total surplus compared to correcting it through a quota.
A. more B. less C. the same D. Any of these statements could be true depending on whether the tax is imposed on the buyer or seller.
What is the economic meaning of the expression that "there is no such thing as a free lunch"?
A. It means that economic freedom is limited by the amount of income available to the consumer. B. It indicates that products only have value because people are willing to pay for them. C. It means there is an opportunity cost when resources are used to provide "free" products. D. It refers to "free-riders," who do not pay for the cost of a product but who receive the benefit from it.
When a pharmaceutical firm spends millions of dollars to lobby and convince Congress to extend the number of years a firm is awarded patent protection, then the pharmaceutical firm is engaging in:
A. rent seeking. B. fraud. C. price discrimination. D. marginal cost pricing.