An article in The Economist reported that prices of CDs in Britain were much higher than prices in the United States or other European countries. There were only a few major companies, and a report from a Parliament committee said there was no serious price competition. The best explanation for this is that
A. the industry was a contestable market.
B. there were entry barriers in production and distribution of CDs.
C. firms were avoiding profit opportunities.
D. there was substantial differentiation of products.
Answer: B
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An increase in the exchange rate for a currency will increase the demand for that currency
Indicate whether the statement is true or false
When Argentina fixed the exchange rate of their peso to the U.S. dollar, one outcome was:
A. Argentinean central bankers regained control of their domestic interest rate. B. Argentinean central bankers were finally able to focus their attention on domestic monetary policy. C. Argentineans began using the U.S. dollar for all of their transactions. D. Argentinean central bankers effectively gave control of their domestic interest rate to the FOMC.
An average tax rate of 20 percent on the poor and 1 percent on the rich would be
A. progressive. B. proportional. C. regressive.
Which of the following is NOT a type of externality?
A. Negative externality B. Positive externality C. Market externality D. Network externality