Which of the following is NOT true about a differentiated-product Bertrand duopoly?
A. Firm 1 and firm 2's prices will be equal to marginal cost.
B. Firm 1's price will always be less than marginal cost, while firm 2's price will be above marginal cost.
C. Firm 1's price will always be above marginal cost, while firm 2's price will be less than marginal cost.
D. None of the answers is correct.
Answer: D
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A single-price monopoly is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This monopoly is
A) not maximizing its profit and should decrease output to increase its profit. B) not maximizing its profit and should increase output to increase its profit. C) maximizing its profit but should shut down. D) maximizing its profit and should not shut down. E) maximizing its profit but still should decrease output to earn even more profit.
"The price of compact fluorescent light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased
This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement. A) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell. B) The statement is false because it confuses the law of demand with the law of supply. C) The statement is false. A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease. D) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.
Under what conditions would firms be likely to support an industry-wide advertising ban?
What will be an ideal response?
The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Answer the following statement true (T) or false (F)