One of the implications of the kinked demand curve model is that even if a firm’s costs change by a measurable amount, market price is unlikely to change. This helps explain the price rigidity observed in many oligopolistic markets. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
If an increase in price causes total revenue to decrease, we can conclude that demand is price elastic. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
If movies on DVD for home rental and movies seen at a theater are substitutes, and the price of movies seen at a theater increases, the demand for movies on DVD will: A) increase. B) stay the same. C) decrease. D) cannot be determined. ANSWER A
Date: September 10th, 2020
The slope of the aggregate expenditure function is the sum of the: A) marginal propensity to consume and marginal propensity to save. B) marginal propensity to consume and marginal propensity to invest. C) marginal propensity to consume, marginal propensity to save, and marginal propensity to import. D) marginal propensity to consume, marginal propensity to invest, […]
Date: September 10th, 2020
Graphically, all else constant, a decrease in the price of labor would be illustrated by: A) a parallel shift of the isocost line in toward the origin. B) rotating the isocost line away from the origin along the labor axis. C) a parallel shift of the isocost line away from the origin. D) rotating the […]
Date: September 10th, 2020
Assuming demand is inelastic, if a firm wants to increase its total revenue, it should raise price. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
The change in import spending due to a change in domestic real income is called: A) marginal propensity to save. B) marginal propensity to consume. C) marginal propensity to import. D) none of the above. ANSWER C
Date: September 10th, 2020
All else constant, an increase in the price of labor would cause the total amount of output that can be produced with a fixed amount of spending to ________. This would result in a movement to a ________ isoquant. A) increase; lower B) increase; higher C) decrease; lower D) decrease; higher ANSWER C
Date: September 10th, 2020
The kinked demand curve model is based on the assumption that firms’ pricing decisions are independent of one another because demand is determined by non-market forces. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Assume the demand function for good X can be written as Qd = 80 – 3Px + 2Py + 10I, where Px = the price of X, Py = the price of good Y, and I = Consumer income. According to this equation: A) a rise in the price of Y would cause the demand […]
Date: September 10th, 2020
