The price-leadership model does not assume the
A. industry is made up of one large firm and a number of smaller, competitive firms.
B. dominant firm maximizes profit.
C. dominant firm allows the smaller firms to sell all they want at the price the leader has set.
D. demand elasticity in response to an increase in price is different from the demand elasticity in response to a price cut.
Answer: D
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If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises?
A) It falls by 162 percent. B) It rises. C) It falls. D) It rises by 1.62 percent.
AIG provide CDS against
A) insolvency. B) default risk. C) illiquidity. D) none of the above
In a supply and demand figure, the equilibrium price and quantity are found at the
A) point where quantity supplied equals quantity demanded. B) horizontal intercept of the demand curve. C) vertical intercept of the supply curve. D) horizontal intercept of the supply and the demand curves.
Allocations that are inefficient are sometimes chosen by policy makers as a way of improving fairness.
Answer the following statement true (T) or false (F)