What is the most likely reason that milk sold in convenience stores is more expensive than milk sold in grocery stores?
A. Convenience stores sell milk in smaller packages, so the per-gallon packaging costs are higher.
B. Grocery stores buy in bulk, while convenience stores buy milk in smaller quantities.
C. People who buy milk at convenience stores tend to have a less elastic demand for milk.
D. Convenience store owners are greedier than grocery store owners.
Answer: C
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Under conditions of perfect competition, an individual producer
a. always maximizes output. b. operates where MR equals MC. c. never suffers a loss. d. operates where MR is greater than MC.
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and real GDP remains the same. b. The real risk-free interest rate rises, and real GDP falls. c. The real risk-free interest rate and real GDP remain the same. d. The real risk-free interest rate falls, and real GDP rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
In this graph, how does the expansionary policy influence aggregate demand?
a. It prevents the aggregate demand curve from moving.
b. It shifts the aggregate demand curve to the left.
c. It shifts the aggregate demand curve to the right.
d. It changes the slope of the aggregate demand curve.
One major advantage of limited liability is that it:
A. is not subject to a free-rider problem. B. is not subject to a principal-agent problem. C. shields the personal assets of owners from liability claims. D. has unlimited profit sharing among the firm's owners.