Briefly and concisely define the following terms:
a. price discrimination
b. tying contracts
c. concentration ratio
d. market power
a. Price discrimination occurs when different prices, relative to costs, are charged to different buyers of the same product.
b. Tying contracts are arrangements under which a customer who wants to buy some product from a given seller is required as part of the price to agree to buy some other product or products exclusively from that same seller.
c. A concentration ratio is the percentage of an industry's output produced by its four (or some other small number) largest firms.
d. Market power is the ability of a firm to raise its price significantly above the competitive price level and to maintain this high price profitably for a considerable period.
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A factor that turned out to be a weakness of the classical theory of growth is its
A) emphasis on saving and investment. B) assumption that the growth rate of the population increases when income increases. C) reliance on constant growth in technology. D) neglect of the subsistence real wage.
Refer to Figure 18-5. The highest 20 percent of households
A) earn 24 percent of the society's total income. B) earn 28 percent of the society's total income. C) earn 42 percent of the society's total income. D) earn 72 percent of the society's total income.