In Order to Encourage Canadians to Avoid Cross Border Shopping

question 194

Multiple Choice

In order to encourage Canadians to avoid cross border shopping, Walmart Canada is striving to keep the price of electronics in Canada equivalent to the price of electronics in its US stores before taxes. If a TV is sold for $700 in US stores, what should be the sale price of the same TV in Canadian stores? Use the exchange rate of US$0.966 per C$.

• A) $700
• B) $724.64
• C) $676.20
• D) $641.27
• E) $619.47

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing them to act as monopolies for their unique products while still facing competition.

Homogeneous

Describes products, goods, or services that are identical in features and quality, making them indistinguishable from one another to consumers.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit.

Herfindahl Indexes

Measures of market concentration, calculated by summing the squares of the market shares of all firms within the industry to assess the competitive landscape.