When firms price their products by adding a percentage markup to their average costs of production, this is called
A) cost-plus pricing. B) rounding up.
C) break-even pricing. D) average cost pricing.
A
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An individual firm desiring to obey the letter of the law while avoiding the effects of regulation may use
a. predatory pricing. b. tit-for-tat strategies. c. creative response. d. collusion.
Madison has an income of $50, which she spends on Pizza (P) and soft drinks (S). Her marginal rate of substitution is MRSPS = S/P. The price of pizza (PP) is $5 and the price of soft drinks (PS) is $2.50. Finally, the formula for her indifference curves is given by S = 2U/P (a) Find Madison's uncompensated demand curve for pizza. (b) Find Madison's compensated demand curve for pizza
What will be an ideal response?
The following equations describe the prices and marginal costs of producing corn and toys in a country. The numbers in the equations indicate the amounts of labor and land needed to produce a unit of corn and a unit of toys. In the equations, the wage rate and the rental rate are denoted by 'w' and 'r,' respectively.Pcorn = 80w + 40rPtoys = 100w + 30ra. If the price per unit of corn and the price per unit of toys are initially $200, calculate the wage rate and the rental rate. Calculate the labor cost per unit of corn and per unit of toys. What is the rental cost per unit of corn and per unit of toys?b. Suppose post-trade the price of corn increases to $240. The price of toys remains unchanged. What are the new values for 'w' and 'r' after adjustment to the new long-run
situation?c. What is the change in the real wage with respect to each good? What is the change in the real rental rate with respect to each good?d. Relate your conclusions in Part C. to the Stolper-Samuelson theorem. What will be an ideal response?
Graphically, demand-pull inflation is shown as a:
A. rightward shift of the AD curve along an upsloping AS curve. B. leftward shift of the AS curve along a downsloping AD curve. C. leftward shift of the AS curve along an upsloping AD curve. D. rightward shift of the AD curve along a downsloping AS curve.