In early 2007, Pioneer and JVC, two Japanese electronics firms, each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets
Which of the following could explain why these firms did not simply raise their prices and increase their profits?
A) The firms are still making profits, just not as high as expected so there is room to lower prices until one can force the other out of business.
B) The move to cut prices is probably just a temporary one to gain market share. In the long run the firms will raise prices and be able to increase their profits.
C) Most likely, intense competition between these two major producers probably pushed prices down. Thereafter, each feared that it would lose its customers to the other if it raised its prices.
D) In perfect competition, prices are determined by the market and firms will keep lowering prices until there are no profits to be earned.
C
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Real economy took a sharp turn for the worse immediately after the bankruptcy filing by Lehman Brothers on September 15, 2008.
Answer the following statement true (T) or false (F)
Higher education is a normal good. If its price falls,
a. the quantity of higher education demanded will fall b. the substitution and income effects work in opposite directions c. the income effect is negative d. higher education will satisfy to the law of demand e. real purchasing power will fall
Is it possible to express an economic model in words without diagrams?
a. No, models can only be stated in diagrams. b. No, the very definition of model requires mathematical form. c. Yes, some of the simplest models are verbal statements. d. Yes, although the best models always use diagrams. e. Uncertain, economic theory has not answered this question yet.
One conceptual problem in assigning assets to M1, M2, and so on, is
A. distinguishing money from “near monies.” B. the problem of measuring asset size. C. the need to agree on a unit of account. D. the different size of financial assets.