Briefly and concisely define the following terms:
a. price discrimination
b. tying contracts
c. concentration ratio
d. market power
a. Price discrimination occurs when different prices, relative to costs, are charged to different buyers of the same product.
b. Tying contracts are arrangements under which a customer who wants to buy some product from a given seller is required as part of the price to agree to buy some other product or products exclusively from that same seller.
c. A concentration ratio is the percentage of an industry's output produced by its four (or some other small number) largest firms.
d. Market power is the ability of a firm to raise its price significantly above the competitive price level and to maintain this high price profitably for a considerable period.
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In the figure above, a movement from point A to point C can be the result of
A) an increase in the government budget deficit. B) a decrease in expected profit. C) a rise in the real interest rate. D) an increase in expected profit. E) a fall in the real interest rate.
Which of the following is an accurate description of the U.S. inflation rate since 1950?
a. The rate has always been below 4 percent. b. Inflation was low in the 1970s. c. Episodes of high inflation occurred in the 1970s and early 1980s. d. Inflation rates were very high in the 1960s. e. Episodes of high inflation occurred in the 1990s.
Typically, oligopolistic industries have a high ______.
a. number of sellers b. level of perfect competition c. number of monopolies d. rate of profit
The three main monetary policy tools used by the Federal Reserve to manage the money supply are
A) interest rates, tax rates, and government spending. B) tax rates, government purchases, and government transfer payments. C) open market operations, discount policy, and reserve requirements. D) open market operations, the exchange rate of the dollar against foreign currencies, and government purchases.