A demand curve usually has a
a. negative slope because price and quantity demanded are inversely related
b. negative slope because as price rises, demand falls
c. positive slope because price and quantity demanded are positively related
d. positive slope because price and quantity demanded are inversely related
e. slope of zero because there is no change along a demand curve when everything else is held constant
A
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If there is a collusive agreement in a duopoly to maximize profit, then the price will
A) equal the marginal cost of production. B) equal the average total cost of production. C) be the same as the price set by a monopoly. D) be the same as the price set by a competitive industry.
Elasticity
A. deals with percentage changes in price and quantity demanded. B. employs percentage changes calculated in terms of average values of the prices and quantities at issue. C. is generally stated in absolute value. D. All of the responses are correct.
To determine whether McDonald's hamburgers are in the same market as Domino's pizza, the criterion we use is their
a. price elasticities of demand b. price elasticities of supply c. income elasticities of demand d. cross elasticities e. equilibrium prices
Refer to the above graph. It represents a monopolistically competitive firm in a constant-cost industry. In long-run equilibrium this firm will:
A. continue to earn economic profits because it has monopolistic power to set its price. B. break even because its demand curve will fall and become more elastic as it loses sales to other firms entering the market. C. become a perfectly competitive firm because there are no significant barriers to entry. D. break even because average total cost (ATC) and marginal cost (MC) will increase as more firms enter the market.