People consume more fresh fruit in the summer than during the rest of the year, yet the prices of fresh fruit are lower in the summer than in other seasons. What accounts for this?
A) Fresh fruit is not subject to the law of supply.
B) The supply of fresh fruit increases in the summer.
C) Fresh fruit is an inferior good.
D) Fresh fruit is not subject to the law of demand.
Answer: B
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Jennifer's Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110
To maximize her profit, Jennifer should A) not produce this additional batch. B) produce this batch of cookies because they will help lower her average fixed cost. C) charge $120 for this batch. D) shut down. E) produce this batch of cookies because their MR exceeds their MC.
Which of the following is NOT an important determinant of collusion in pricing games?
A. The history of the particular market. B. The punishment mechanisms that are in place. C. The number of firms in the industry. D. None of the answers is correct.