What is the nature of the proximity-concentration tradeoff that firms have to deal with then making decisions regarding foreign direct investment?
What will be an ideal response?
If the firm has numerous production facilities close to their various international markets, trade costs will be relatively low. However, when there are numerous production facilities, each will be relatively small, and opportunities for economies of scale will be foregone.
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Which of the following is NOT an example of the hurdle method of price discrimination?
A. Offering a mail-in rebate. B. Charging less for airline tickets if the trip includes a Saturday night stayover. C. Permanently reducing all prices by 10%. D. Giving a discount on movie tickets to people with a student ID.
Suppose that you're the manager of a firm. You notice that when you raised your price from $10 to $11, sales fell from 500 to 400. Should you raise your price more?
What will be an ideal response?