Two car dealers have lots across the street from each other. Frank decides that he is going to raise his prices. Sandra decides to drop her prices. Which of the following scenarios is one in which Frank could make money?
a. Customers assume that higher prices mean more inventory.
b. Sandra’s prices are lower than Frank’s.
c. Another dealer has lower prices than both Sandra and Frank.
d. Customers assume that higher-priced cars must be of higher quality.
d. Customers assume that higher-priced cars must be of higher quality.
A dealer who raises prices may find that customers assume that the higher price means that cars are of higher quality; as a result of raising prices, the dealer might sell more cars. But this runs exactly counter to the basic model of demand and supply and would reach natural limits.
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Suppose your manufacturing firm is not a price-taking seller (i.e., has some control over your product price) and sells machinery to U.S. (domestic) buyers as well as foreign buyers
The domestic demand for your product is inelastic but the foreign demand is elastic, and the machinery is bulky so that the high transport costs prevent resale among the buyers. You could charge both groups of buyers the same price for the machinery, but you know that you could increase total sales revenue by charging the domestic buyers a ________ price and charging the foreign customers a ________ price. A) higher, higher B) higher, lower C) lower, higher D) lower, lower
If imports exceed exports it would be called a trade __________.
Fill in the blank(s) with the appropriate word(s).
A decrease in the personal income tax rate ________ disposable income, which ________ consumption.
A. increases; increases B. increases; decreases C. decreases; decreases D. decreases; increases
Discretionary Fiscal Policy differs from Nondiscretionary Fiscal Policy in that
A. the former deals with government spending, and the latter deals with tax policy. B. the former is chosen by Congress, while the latter is chosen by the President. C. the former often takes years to enact, while the latter takes effect automatically. D. the former is always stabilizing, while the latter is never stabilizing.