The airline dominating Charlotte, North Carolina, once contended that it could not overcharge for fear of potential competition, if not at Charlotte, then at Raleigh, a two-hour drive away. Do you find this argument compelling, given the theory of contestable markets?
The theory of contestable markets holds that oligopolists will have to charge competitive prices to ward off potential entry. But entry costs may be very high, especially if there are no gates in Charlotte. Also, Charlotte residents would rather not travel to Raleigh to depart. So the airline is likely to charge above the competitive price.
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According to the liquidity preference theory, the demand for money is ________ related to aggregate output and ________ related to interest rates
A) negatively; negatively B) negatively; positively C) positively; negatively D) positively; positively
Which of the following is a tool of commercial policy?
a. Corporate income tax b. Payroll tax c. Excise duty d. Tariff e. Octroi duty
Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?
a. The gap shrinks if taxes are taken into account. b. The gap shrinks if consumption, rather than income, is compared. c. The gap shrinks if the number of people in the household is taken into account. d. The gap shrinks if the state of residence is taken into account.
Illegal trading to evade tax
What will be an ideal response?