In the DuPont cellophane case, rivals accused DuPont of monopolizing cellophane. DuPont claimed that the relevant market was flexible wrapping material, such as wax paper and aluminum foil, rather than just cellophane. DuPont won the case. What type of evidence constituted DuPont’s defense?
What will be an ideal response?
DuPont needed to show that other flexible wrapping materials are substitutes for cellophane, which requires a large, positive cross elasticity. DuPont showed that as the price of other flexible wrapping materials increased, sales of cellophane declined substantially, showing a large, positive cross elasticity.
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Sasha derives utility from consuming apples and tacos as shown in the table above. Apples cost $1 each and tacos cost $2 each. If Sasha's income is $8, he will consume
A) 4 apples and 2 tacos. B) 2 apples and 3 tacos. C) 0 apples and 4 tacos. D) 3 apples and 3 tacos.
The five options available to the U.S. Treasury for financing government spending are as follows: collecting taxes, printing currency, borrowing from the Federal Reserve, borrowing from the public, and
A) expanding the money supply. B) devaluing the dollar. C) borrowing from the banking system. D) raising bank reserve requirements.
Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:
A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, fixed costs D) perfectly elastic, zero
The money supply in Econland is 1,000, and currency held by the public equals bank reserves. The desired reserve-deposit ratio is 0.25. Bank reserves equal ________.
A. 800 B. 500 C. 200 D. 250