If an increase in production costs (say, an increase in the wage rate) results in an upward shift in the MC curve, but the MC curve still passes through the MR gap created by the kinked demand curve, then the oligopolist will respond to that increase in production costs by
a. keeping price and output the same
b. raising price and decreasing output
c. lowering price and increasing output
d. raising price and raising output
e. lowering price and lowering output
A
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Because of a decrease in labor costs, a monopoly finds that its marginal cost and average total cost have decreased. The monopoly ________ its price and ________ its quantity
A) raises; increases B) raises; decreases C) lowers; increases D) lowers; decreases
Under fixed exchange rates, domestic asset transactions by the central bank
A) can be used to alter the level of foreign reserves but not to affect the state of employment and output. B) cannot be used to alter the level of foreign reserves but only to affect the state of employment and output. C) can be used to alter the level of foreign reserves and to affect the state of employment and output. D) can be used to alter the domestic money supply and the level of foreign reserves. E) can raise output to full-employment level.
Which of the followings does NOT describe the money market in the ISLM model?
A) money demand function B) investment function C) money market equilibrium condition D) money supply
Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats. Under a system of free trade, each country specializes and then trades with the other. If the price starts at four hats per doormat, and then increases to five hats per doormat, then:
a. people in Portugal will not want to buy as many hats. b. Spain no longer has a comparative advantage in hats. c. Portugal is flooding the market with too many doormats. d. some of the gains from trade shift to Portugal. e. some of the gains from trade shift to Spain.