Economic Theory Predicts That a Profit Maximizing Car Rental Agency

question 25

Multiple Choice

Economic theory predicts that a profit maximizing car rental agency with some market power would set its prices in what way?

• A) Charge the same for both weekday and weekend rentals.
• B) Charge more for weekend rentals and less for weekday rentals.
• C) Charge more for rentals during the week and less for weekend rentals.

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Definitions:

Autarky

A situation or policy where a country aims to be completely self-sufficient, avoiding international trade.

Autarky Price

The price of goods or services within a self-sufficient economy that does not engage in international trade.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, representing extra benefit to producers.

International Trade

The exchange of goods, services, and capital between countries and territories, often driven by comparative advantages and specialization.