Suppose a monopolist offers a $20 mail-in rebate on an item with a list price of $100. In order for the rebate to be a perfect hurdle, it must be the case that:
A. buyers use the rebate if and only if they have a reservation price between $80 and $100.
B. buyers use the rebate if and only if their cost of filling out the rebate is less than $20.
C. all buyers with a reservation price greater than $80 use the rebate.
D. some buyers with a reservation price greater than $80 use the rebate.
Answer: A
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Why does each of the following facilitate the creation and stability of a cartel?
a. High barriers to entry b. An identical product c. Similar costs
"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has
A) an absolute advantage in cooking, cleaning, and car repair. B) a comparative advantage in cooking, cleaning, and car repair. C) more intelligence than me. D) more income than me.
Which of the following is not consistent with the basic postulate of economics that incentives matter?
a. Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. b. A politician votes against a proposal because most of his constituents oppose it. c. People drive less because of higher gas prices. d. People buy more milk in response to a reduction in the price of milk.
How can the utility-maximizing rule be used to explain the substitution and income effect?
Please provide the best answer for the statement.