Strategic trade policy requires ALL of the following EXCEPT
A) subsidies set before output levels.
B) non-retaliation of the trading partner.
C) credible actions on the part of the subsidizing government.
D) incomplete information on the part of the government.
D
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The XYZ Co sells shirts. Shirts with the company label on the tag are perceived to be of higher quality than shirts with the store's label. Yet, shirts are of identical quality regardless of label
The demand for perceived high-quality shirts is ph = 50 - qh. The demand for perceived low-quality shirts is pl = 10 + ph – ql. The firm can produce shirts at TC = qh + ql. How many shirts does the firm label as low quality and how many as high quality? What prices are charged?
To practice price discrimination a firm must:
a. face an inelastic demand curve. b. charge the same price to all its existing customers. c. have different groups of customers with different price elasticity of demand. d. sell a product which has close substitutes.