In order for a firm to maximize profits through price discrimination, the firm must have some market power and be able to prevent arbitrage
a. True
b. False
Indicate whether the statement is true or false
True
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Philosopher John Rawls developed a thought experiment to help determine a standard by which we could say individuals are in agreement with the constitutional rules and, thus, actions of government. Behind his "veil of ignorance" _____
a. people know nothing about their friends and family b. people know nothing about themselves c. people know nothing about causal relationships d. people know nothing about politics
What is the benefit of understanding the income and the substitution effects?
A) The income effect might run in the opposite direction of the substitution effect. B) The income effect always runs in the opposite direction of the substitution effect. C) The income and substitution effects just offset each other, which explains a lot. D) The income and substitution effects are proportional to each other.
When supply and demand for a product increase simultaneously, we
A) can predict that both the market clearing price and the equilibrium quantity will increase. B) can predict that both the market clearing price and the equilibrium quantity will decrease. C) cannot predict the market clearing price, but know that the equilibrium quantity will increase. D) cannot predict the change in either the equilibrium quantity or the market clearing price.
Which of the following pairs is the best example of substitutes?
a. coffee and cream b. videotapes and VCRs c. honey and biscuits d. bread and butter e. butter and margarine