Many manufacturers sell products labeled as having imperfections at a discount at their factory outlets but do not ship these imperfect goods to regular retail outlets. Why?
What will be an ideal response?
There is some substitutability between the goods, but imperfects sell for a lower price. Suppose, for example, the good sells for $2, but imperfects sell for $1. Both goods cost the same to ship, say $1. As a result, the relative price of an imperfect at a factory outlet is (1/2 ) but rises to (2/3 ) at the retail outlet, where imperfects will not sell because of the higher relative price.
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Once the state environmental protection agency devises its new policy to protect the environment, firms decide whether to remain in the state or move their operations to a neighboring state. In the language of game theory, this is an example of:
A) a cooperative game. B) a sequential game. C) a threat. D) the Prisoner's dilemma.
Someone who committed the association-is-causation fallacy might conclude that
a. event B, which follows event A, was caused by the event A b. event B, which follows event A, was not necessarily caused by event A c. the simplest model is the best predictor d. what is true for the individual is also true for the group e. what is true for the individual is not necessarily true for the group