A firm has market power:
A. when it can profitably charge any price of its choosing.
B. when it is characterized as a price taker.
C. when it can profitably charge a price that is above its marginal cost.
D. only when it is the sole firm producing in a market.
C. when it can profitably charge a price that is above its marginal cost.
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Imagine winning a radio trivia contest and being given the choice of three packages. Each package has two prizes. One package has a cellular phone and a beeper; one package has a cellular phone and a coupon for unlimited calls for a year; and one
package has a cell phone and a compact disc player. Unfortunately, the labels on the packages only give you the following information: the goods in Package A have a cross elasticity of 0.63, the goods in Package B have a cross elasticity of 0.00 . and the goods in Package C have a cross elasticity of –0.84. a . Which package will you choose if you want the cellular phone and the coupon for unlimited calls? Explain your answer b. Which package will you choose if you want the cellular phone and the beeper? Explain your answer.
Nominal wages can be converted into real wages by
a. multiplying the nominal wages by the CPI. b. adding the CPI to the nominal wages. c. subtracting the CPI from the nominal wages. d. dividing the nominal wages by the CPI.