In the airline industry, tit-for-tat strategies have frequently led to
a. reciprocal hiring practices
b. cost-reducing innovations
c. profit-destroying price wars
d. pricing policies that encouraged the entry of new firms
e. profit-enhancing wage bargains
C
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Refer to Reducing Long-Run Labor Usage. The substitution effect of the wage change is the movement from point X to
The following questions refer to the accompanying diagram, which shows a firm reducing its long-run labor usage from L0 to L1 in response to an increase in the wage rate.
a. point A.
b. point B.
c. point C.
d. point D.
Average variable cost (AVC)
A) is the variable cost divided by the average sales price of the final good. B) is the variable cost divided by the quantity of output produced. C) is equal to average fixed cost (AFC) when no output is produced. D) is always less than average fixed cost (AFC).
Which of the following represents a stock's fundamental value?
A) the price the stock would sell at in the midst of a rational bubble B) the price the stock would sell at if the interest rate were zero C) the present value of its expected future dividend payments D) the simple sum of its future dividend payments E) none of the above
In the short run, marginal cost is increasing when
A) MPL is decreasing. B) MPL is increasing. C) APL is increasing. D) APL is decreasing.