In early 2007, Pioneer and JVC, two Japanese electronics firms, each announced that their profits were going to be lower than expected because they both had to cut prices for LCD and plasma television sets
Which of the following could explain why these firms did not simply raise their prices and increase their profits?
A) The firms are still making profits, just not as high as expected so there is room to lower prices until one can force the other out of business.
B) The move to cut prices is probably just a temporary one to gain market share. In the long run the firms will raise prices and be able to increase their profits.
C) Most likely, intense competition between these two major producers probably pushed prices down. Thereafter, each feared that it would lose its customers to the other if it raised its prices.
D) In perfect competition, prices are determined by the market and firms will keep lowering prices until there are no profits to be earned.
C
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A. The preferences of each member is transitive. B. The outcome of the vote will not change, regardless of voting method. C. The most efficient outcome for the group will occur if pair-wise majority voting was used. D. The collective preferences of the group are transitive.
Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending. The reason is
A) that people do not realize that taxes have increased also. B) the interest rate on the debt will increase. C) people will forgo private consumption now as society substitutes government goods for private goods. D) people believe that they can consume the government provided goods and have future generations pay the bill.