In Recent Years, Online Bookseller Amazon

question 250

Multiple Choice

In recent years, online bookseller Amazon.com has lowered its profits by offering some of its customers free shipping and building more warehouses to hold its inventories.Which of the following explains Amazon.com's actions?

• A)Amazon.com feared government regulation if its profits were too high.
• B)Amazon.com took these actions to deter entry into its market by new online booksellers.
• C)Amazon.com took these actions to compete more effectively with existing online booksellers.
• D)Amazon.com was forced to take these actions because of the bargaining power of its suppliers.

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Definitions:

Expected Inflation

The predicted average increase in prices across the economy over a specified period.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine the relative value of the currencies.