If a profit-maximizing oligopolist has a kinked demand curve, a downward shift in its marginal cost curve:
A. increases output or price but not both.
B. may not affect output or price.
C. reduces output but not price.
D. reduces both output and price.
Answer: B
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Rational inattention refers to ________
A) the risk a firm runs when they do not pay attention to their customers B) firms making infrequent price decisions because of the time and effort those decision require C) the cost to the firm of losing sales from alienating customers D) all of the above E) none of the above
The two tendencies of a firm in a cartel are the incentive to:
a. cheat to maximize joint profits and the incentive to raise prices. b. cheat and avoid collusion and the incentive to raise price to maximize the firm's share of profits. c. increase output in order to minimize per-unit cost and the incentive to reduce price in order to maximize joint profit. d. cooperate to maximize joint profits and to cheat on the agreement in order to increase the firm's share of the profit.
If the demand for product R increases as the price of product S increases, then _____
a. consumer preferences for S have increased b. R and S are not related goods c. R and S are substitutes d. R and S are complements e. R is an inferior good
Economists who believe the supply-side effects of tax cuts are small essentially believe that
A) tax cuts mainly affect aggregate demand. B) tax cuts mainly affect aggregate supply. C) tax cuts will increase the quantity of labor supplied. D) tax cuts will result in relatively small changes in the price level.