-Sears and Wal-Mart Must Decide Whether to Lower Their Prices

question 197

Multiple Choice

-Sears and Wal-Mart must decide whether to lower their prices, based on the economic profits shown in the table above. Which of the following is TRUE?

• A) This situation is not a prisoners' dilemma.
• B) If Sears lowers its prices and Wal-Mart does not, Sears will make a $20 million economic profit.
• C) If Wal-Mart lowers its prices, Sears should keep its prices high.
• D) Both Sears and Wal-Mart would jointly be better off if they could each keep their prices high.

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Definitions:

Discriminatory Wage Gap

The difference in wages earned by workers not based on skills or job type but on arbitrary factors like race, gender, or ethnicity.

Profit Motive

The incentive that drives individuals and businesses to improve their material well-being by seeking financial gains.

Discrimination Effect

The impact on consumer choice and market outcomes when products are differentiated, often based on perceived quality or branding, leading to variations in pricing.

Discrimination

Discrimination refers to unjust or prejudicial treatment of different categories of people, especially based on race, age, or sex.