What is the most likely response by rivals when an oligopolist cuts its price to increase its sales?
A. Raise their prices.
B. Cut their prices.
C. Ignore the change.
D. Reduce their costs.
Answer: B
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The long-standing debate over rules versus discretion in macroeconomics centers on the following statement ________
A) "discretionary policy can lead to bad long-run outcomes but rules lack flexibility in the short-run" B) "the speed with which the self-correcting mechanism in the economy acts is in question" C) "the speed with which unemployment tends to disappear is debatable" D) all of the above E) none of the above
XYZ Co operates in a competitive market. Its production function is q = L?K?. The exponents, ? and ?, are both less than 1. The firm's capital is fixed, and it takes the wage and price as given
Derive the firm's short-run demand for labor as a function of K, w, and p. How does the firm react to an increase in the wage rate?
Which of the following is a difference between the average tax rate and the marginal tax rate?
a. The average tax rate is applicable under a proportional tax system, whereas the marginal tax rate is applicable under a progressive tax system. b. The marginal tax rate is applicable under a proportional tax system, whereas the average tax rate is applicable under a progressive tax system. c. The average tax rate is the rate at which each additional dollar earned is taxed, whereas the marginal tax rate is the total tax paid divided by the amount of taxable income. d. The marginal tax rate is the rate at which each additional dollar earned is taxed, whereas the average tax rate is the total tax paid divided by the amount of taxable income.
If the automobile industry has become highly concentrated and cartelized. To maintain profits, firms may
A. allow newcomers to favorably enter the market. B. become price takers. C. prevent entry. D. lower prices to raise revenues.