When firms use cost-plus pricing in a market,
a. each firm determines its price based on other firms' costs and prices.
b. it may appear as though firms are colluding in price when they actually are not.
c. prices of different firms diverge widely.
d. each firm falls short of maximizing profit as they charge the same price irrespective of their costs.
e. each firm sells only to its most-favored customer.
b
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Refer to Table 14-2. Suppose pricing PlayStations is a repeated game in which Wal-Mart and Target will be selling the game system in competition over a long period of time. In this case, what is the most likely outcome?
A) a noncooperative equilibrium in which each firm charges the high price B) a noncooperative equilibrium in which each firm charges the low price C) a cooperative equilibrium in which each firm charges the low price D) a cooperative equilibrium in which each firm charges the high price
When the BEA calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year to year, this is called calculating GDP using
A) current-year prices. B) fixed-weight prices. C) fixed base-year prices. D) chained-weighted prices.