Airlines engage in price discrimination.
a. true
b. false
Answer: a. true
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When firms in monopolistic competition incur an economic loss, some firms will
A) enter the industry and produce more products. B) exit the industry, and demand will increase for the firms that remain. C) exit the industry, and demand will decrease for the firms that remain. D) enter the industry, and demand will become more elastic for the original firms. E) exit the industry and other firms will enter.
A zero inflation rate is not the Fed's objective because
a. that would cause prices to rise b. that would cause price to fall c. it knows that it cannot attain a zero rate d. it believes that the true rate of inflation is lower than what is measured by the Consumer Price Index (CPI) e. high rates of inflation may help labor markets adjust more easily
For an incumbent, investing in plant and equipment that reduces marginal cost while raising total cost makes sense if
A) the incumbent's profit fro, producing the entry-deterring level of output after making the investment exceeds the profit the firm would earn if it didn't make the investment and entry occurred B) the incumbent's profit from producing the entry-deterring level of output after making the investment is positive C) the potential entrant cannot enter the market profitably after the incumbent makes the investment and produces the entry-deterring level of output D) the potential entrant would not enter the market anyway
An attempt by one oligopolist to increase its market share by cutting prices will leave competitors unaffected.
Answer the following statement true (T) or false (F)