The Blue Ridge Furniture Factory has fixed costs of $10 million and variable costs of $5 million. If it turns out 1 million chairs a year, how much is the average total cost of producing one chair?
What will be an ideal response?
$15
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How can a buyer of car insurance help in reducing the effects of adverse selection?
What will be an ideal response?
From Example 1.2 in the textbook, Pindyck and Rubinfeld distinguish between the mass market and dealer market for bicycles. Although there are many dealers in the U.S and only a few mass merchandisers, we should expect the dealer market to be somewhat less competitive than the mass market. Why?
A) Due to their differences in quality and performance, dealer bicycles are not close substitutes. B) The geographic extent of the market for dealer bicycles is typically small, so the individual sellers do not have many local competitors. C) Dealers are small sellers and have little control over bicycle prices. D) A and B are correct. E) B and C are correct.
Setting a price so low that competitors are driven out of a market and then boosting the price is called
a. price discrimination b. resale price maintenance. c. a tying arrangement d. price fixing. e. predatory pricing
Which of the following is a characteristic of a perfectly competitive market?
A. a large number of firms in a market B. selling a standardized product C. no barriers to entry D. All of these