Outlet Malls Coach Handbags sells its purses through traditional department stores and specialty shops. But it sells discounted bags through "Coach Brand" shops at outlet malls. Why does it own the outlet mall stores but not the stores at the traditional department stores and specialty shops?
Coach is trying to engage in price discrimination - selling the same model bag at different prices to different customer groups. It could offer lower wholesale prices to "third-party" discount stores in outlet malls. But if it did, it would worry that these stores would turn around and sell the bags to the department stores and specialty shops and arbitrage away the price differences.
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The formula for the effect of any change in autonomous spending, ?A, where b equals the MPC is
A) ?Y = ?A [1/(1 - b)]. B) ?Y = ?A [b/(1 - b)]. C) ?Y = ?A [1/(1 + b)]. D) ?Y = ?A [b/(1 + b)].
The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2014, the pay phone costs 50 cents for a call and a first-class stamp costs 49 cents. We know that
A) both the nominal and the relative price of phone calls increased from 1950 to 2014. B) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2014. C) all prices increased from 1950 to 2014: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps. D) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but we can't tell if the relative prices increased or decreased without more information.