Suppose Kellogg's, General Mills, and Post make the majority of breakfast cereal sold in the United States. If Kellogg's decides to decrease its prices by 10%,
A. General Mills and Post will immediately respond because of mutual interdependence.
B. Kellogg's will also decrease the variety of cereals it offers because of nonprice competition.
C. the other firms in the industry will not change their pricing strategy because of the kinked demand curve.
D. more firms will enter the market due to low barriers to entry.
Answer: A
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A) 3% B) 2.5% C) 1% D) -0.5%
The task of deciding which consumer gets each of the goods produced in a free-market economy is solved by
A. the price system. B. the industries that produce the goods. C. the central planners. D. citizens with political power.
One In the News article titled "Unemployment Spreading Fast Across U.S. Industries" states that in the next few months the rate of unemployment may rise as high as
A. 6 percent. B. 5 percent. C. 8 percent. D. 7 percent.
The ease and quickness with which an asset can be exchanged for goods, services, or other assets is its
A) risk. B) time to maturity. C) velocity. D) liquidity.