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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Which branch of economics considers that economic agents do not always act rationally?
A) Microeconomics B) Macroeconomics C) Behavioral economics D) Econometrics
Which of the following is TRUE?
A) Economic efficiency occurs if the maximum feasible amount of output is achieved from a given quantity of inputs. B) Economic efficiency depends only on what is feasible. C) If production is technologically efficient then it must be economically efficient. D) None of the above statements are correct.