The demand for the product of a competitive price-taker firm is:
A. perfectly inelastic.
B. perfectly elastic.
C. greater than zero but less than one.
D. dependent on the availability of substitutes for the firm's product.
Answer: B
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Which of the following is FALSE?
a. Maximizing division profits can sometimes lead to reducing company-wide profits b. Managers of profit centers are never given any discretion in their decision making c. Profit centers usually largely run themselves d. A manager being rewarded on division revenues has the most incentive to make good decisions for his division
Which of the following is not true for a public good?
a. Marginal cost of serving public good to one more person is zero. b. Free rider problem arises in case of public goods. c. Exclusion is not possible in most of the public goods. d. Public goods include only material commodities.
When firms in a monopolistically competitive market engage in price-related advertising, defenders of advertising argue that
a. the quality of products sold in the market always increases. b. customers are less likely to be informed about other characteristics of the product. c. new firms are discouraged from entering the market. d. each firm has less market power.
As the market price of a service increases, more potential sellers will decide to perform that service because:
A. it's more prestigious to produce high-priced services. B. more potential sellers will find that the market price exceeds their reservation price. C. higher prices result in higher revenue. D. higher prices lead to lower opportunity costs.