A Major Hotel Chain Found That If It Was to Reduce

question 73

Multiple Choice

A major hotel chain found that if it was to reduce the cost of the ice cream it currently served,it would be able to save over 400 employees' jobs.Therefore,it switched from a high priced brand of ice cream to a more moderate priced ice cream.This is known as the

• A) substitution effect.
• B) income effect.
• C) brand effect.
• D) commercial effect.
• E) value effect.

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Definitions:

Price Fixing

An illegal practice where businesses collude to set prices at a certain level, rather than allowing market forces to determine them.

Microsoft

A multinational corporation that specializes in the development, manufacturing, licensing, support, and sales of computer software, consumer electronics, and personal computers and services.

Antitrust Policy

Regulations and laws that encourage competition by limiting monopolies, preventing mergers that would restrict competition, and other business practices that would reduce consumer welfare.

Tacit Collusion

An unspoken, informal agreement among competitors to limit competition and keep prices high.