The only types of firms that cannot theoretically practice price discrimination are perfectly competitive firms
a. True
b. False
Indicate whether the statement is true or false
True
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Explain the law of one price and the theory of purchasing power parity. Why doesn't purchasing power parity explain all exchange rate movements in the short run? What factors determine long-run exchange rates?
What will be an ideal response?
Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then
A. India has a comparative advantage in the production of rice, but it is outweighed by Japan's absolute advantage in rice production. B. India has a comparative advantage in rice production, but there will be no gains from specialization and trade. C. Japan has a comparative advantage in the production of both goods. D. India has a comparative advantage in the production of rice, and specialization and trade between the two countries can be mutually beneficial.