What can IAC do to expand trade with DVC?
What will be an ideal response?
One change in policy would be for IAC to reduce tariffs and import quotas on labor-intensive manufacturing goods or agricultural products for which DVC often have a comparative advantage. Also, IAC provide large subsidies for agricultural products that compete with agricultural products produced by DVC. These large subsidies in IACs lead to worldwide overproduction of some agricultural products and serve to depress worldwide prices, thus hurting DVC. The reduction or elimination of agricultural subsidies in IAC would help DVC improve the market for their products and product prices.
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If McDonald's, Wendy's, and Burger King agree with each other not to sell hamburgers for less than $3.95 apiece, all three could be found guilty of
A) an interlocking directorship under the Clayton Act. B) price fixing under the Sherman Act. C) a deceptive business practice under the Clayton Act. D) None of the above answers is correct.
What is the marginal cost of a good?
What will be an ideal response?
Though the theory of purchasing power parity applies in the long run, it is unlikely to apply in the short run, because ________
A) foreigners purchase only tradable goods B) countries do not produce identical goods C) prices are sticky D) price levels change quickly
Suppose you are in charge of setting prices at a local ice cream shop. The business needs to increase its total revenue, and your job is on the line. You evaluate the data and determine that the price elasticity of demand for ice cream at your shop is 1.8 . You should
a. increase the price of ice cream. b. decrease the price of ice cream. c. decrease the cost of operating the ice cream shop. d. increase the price of bottled water also sold at the ice cream shop because its price elasticity of demand is 1.2.