In the cigarette industry either R. J. Reynolds or Phillip Morris, for a time, raised prices twice a year by about 50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call this
a. predatory pricing.
b. a price war.
c. price leadership.
d. sales maximization.
c
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The price elasticity of demand for meat in general is inelastic while the price elasticity of demand for turkey or chicken is more elastic. Why?
A) Turkey and chicken are not red meat. Because they are not the same as other meats, they should have different elasticities. B) Turkey and chicken have many substitutes, such as fish or beef, while meat in general has fewer substitutes. C) Turkey and chicken are inferior goods. D) Turkey and chicken are normal goods.
According to the ability-to-pay principle of taxation
A) people in the same economic situation should bear an equal share of the tax burden. B) individuals who are willing to bear a greater share of the tax burden should be compensated with non-monetary benefits. C) it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay. D) individuals who receive the benefit of a good or service should bear a greater share of the tax burden.
If an individual redeems a U.S. savings bond for currency
A) M1 stays the same and M2 decreases. B) M1 increases and M2 increases. C) M1 increases and M2 stays the same. D) M1 stays the same and M2 stays the same.
The iconic American drink-maker, Coca-Cola, announced plans in 2008 to buy the dominant Chinese fruit juice company for $2.5 billion. But China just rolled out a new law to guard against business monopolies
How would this rent-seeking behavior by Coca-Cola most likely affect efficiency in the drink market? A) Profit would increase. B) Producer surplus would increase. C) Consumer surplus would decrease. D) Deadweight loss would increase.