Refer to the graph shown, which shows an oligopolist facing a kinked demand curve. The firm will not increase price when marginal costs fluctuate between which two points?
A. a and b
B. b and c
C. c and d
D. a and d
Answer: B
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Market failures ________ and generate ________
A) compel the government to act; regulations B) create monopolies or oligopolies; deadweight loss C) reduce economic efficiency; deadweight loss D) create deadweight loss; externalities
An increase in the MPC
a. increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. c. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand.
The mutual interdependence that characterizes oligopoly arises because:
A. the products of various firms are homogeneous. B. the products of various firms are differentiated. C. each firm in an oligopoly depends on its own pricing strategy and that of its rivals. D. the demand curves of firms are kinked at the prevailing price.
What is consumer surplus and how is it calculated?
What will be an ideal response?