The Brooks Appliance Store and the Lefingwell Appliance Store (both are located in the same city) each sell an identical washer-dryer pair. The owner of each store considered offering the washer-dryer pair for $700, but decided on a price of $500
If this is a Nash equilibrium we can conclude that
A) the owners of the stores feared that charging $700 could be used as evidence of collusion.
B) charging $500 was the most profitable strategy for each store, regardless of what price was charged by the other store.
C) the stores were less concerned about making a profit from the washer-dryer pair than they were with attracting customers who would also buy other appliances.
D) each store owner feared charging the higher price would result in being undercut by the other store charging the lower price.
B
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During the holiday season, high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week. They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters. Bargain hunters have time to shop around and frequently shop during the week. What do economists call this price strategy used by
high-end retailers? a. oligopoly b. price discrimination c. compensating differential d. in-kind transfers
Suppose the consumption equation is represented by the following: C = 250 + .8YD. The multiplier for the above economy equals
A) 2. B) 3. C) 4. D) 5. E) none of the above
What adjustments need to be made to go from national income to GDP?
What will be an ideal response?
Sarafina withdraws $450 from her saving account and places the money in her wallet. This transaction will
A. increase both M1 and M2. B. decrease both M1 and M2. C. not change M1 and decrease M2. D. increase M1 and not change M2.