According to the kinked demand theory, when one firm raises its price, other firms will:
a. also raise their prices.
b. refuse to follow.
c. increase their advertising expenditures.
d. exit the industry.
b
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Suppose there are four firms in a market and each of them sell differentiated products. Does it make sense for these firms to engage in a price war? Why or why not?
What will be an ideal response?
If Family Travel Agency, a monopolistic competitor, offers services that are differentiated from the services of other producers in the industry, it
a. faces a perfectly elastic demand curve b. is a price taker c. has some power to control the price it charges d. faces a perfectly inelastic demand curve e. produces a product with no close substitutes
Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day.Number of Cakes Per DayTotal Cost Per Day0$1001$1802$2203$3004$4005$5206$660 If the market for wedding cakes is perfectly competitive, and wedding cakes sell for $95 each, then at her profit-maximizing level of output, Sarah will earn a ________ of ________ per day.
A. loss; $15 B. profit; $285 C. loss; $100 D. profit; $15
Using tariffs, quotas, or other barriers to trade to protect domestic jobs is called
A. offshoring. B. globalization. C. dumping. D. protectionism.