If a firm perceived that the other firm in an implicit pricing agreement dropped its price in an attempt to gain market share, then its most likely response would be to:
A. merge with the other firm.
B. engage in a price war.
C. raise price to punish the other firm.
D. keep its price the same.
Answer: B
You might also like to view...
Refer to Figure 18-1. Italians cut back on smoking and cut their demand for American cigarettes in half. Assuming all else remains constant, this would be represented as a movement from
A) B to A. B) A to D. C) D to C. D) B to C.
An implication of the efficient markets hypothesis is that
A) only sophisticated investors will be able to earn above-normal profits from financial investments. B) above-normal profits are available only to major traders. C) above-normal profits will be eliminated in the trading process. D) unless he or she acts recklessly, the average investor should be able to make above-normal profits.
Which of the following is true for a constant cost industry?
a. The total cost of producing 500 units will be the same as the total cost of producing 250 units. b. If 100 units can be produced for $500, then 200 units can be produced for $1,000. c. The demand curve and, therefore, the unit price in the industry are constant. d. Firms in the industry will hold output constant if the price of the product increases.
Which of the following is a major reason for offshoring?
a. The gradual reduction in information and communication technologies. b. The fragmentation of production processes. c. The gradual decline in worldwide competition. d. All of the above are major reasons for offshoring.