Macroeconomics

According to the kinked demand curve model, if there is a modest incre

According to the kinked demand curve model, if there is a modest increase in a firm’s variable production costs, what is likely to happen to the firm’s profit-maximizing level of output and the amount of profit earned by the firm? Why? What will be an ideal response?   ANSWER Given the way the kinked demand […]

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Date: September 10th, 2020

Assume the auto market is initially in equilibrium with imports from J

Assume the auto market is initially in equilibrium with imports from Japan taking up a significant share of the market. Now assume a quota on imports of Japanese cars is established. What will occur at the initial equilibrium price to signal market participants regarding the change that has taken place? A) A surplus is created […]

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Date: September 10th, 2020

The text’s discussion of the airline industry, the soft drink industry

The text’s discussion of the airline industry, the soft drink industry, and the doughnut industry reveals a common theme when it comes to the types of competitive practices firms in each industry engage in. What is it and what advantage does it offer firms?   ANSWER Firms in each of the industries listed above tend […]

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Date: September 10th, 2020