John Signed a Two Year Contract with Z-Gadget to Get

question 2

Multiple Choice

John signed a two year contract with Z-Gadget to get a subsidized price on his new iPhone.He had Z-Gadget's service for only 6 months and has been dissatisfied with its service and wanted to cancel the contract.However,he did not do so because he will have to spend a lot for canceling his Z-Gadget contract and signing up for another alternative.Which of the following characteristics of a powerful supplier group does Z-Gadget have with respect to its contract with John?

• A) The supplier industry is more concentrated than the industry it sells to
• B) Industry participants face switching costs in changing suppliers
• C) Suppliers offer differentiated products
• D) No substitutes exist for what the supplier group provides

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Definitions:

Aggregate Expenditure Line

A visual depiction in macroeconomics illustrating the overall expenditures on goods and services within an economy across different income levels.

Marginal Propensity

The tendency of a person to spend an additional unit of currency; often relates to income in the context of marginal propensity to consume or save.

Simple Multiplier

The ratio used to estimate the proportional amount of increase, or decrease, in final income that results from an injection, or withdrawal, of spending.

Marginal Propensity

The rate at which an individual, household, or economy is likely to consume (or save) with respect to an incremental increase in income.