The negatively-sloped part of the long-run average total cost curve is due to which of the following? A) Diseconomies of scale. B) Diminishing returns. C) The difficulties encountered in coordinating the many activities of a large firm. D) The increase in productivity that results from specialization. ANSWER D
Date: September 10th, 2020
In which of the following scenarios would a predatory pricing scheme have the greatest chance of success, all else constant? A) The predatory price is set well below cost, many rivals are likely to enter after the strategy ends, and profits can be recouped only over a relatively long period of time. B) The predatory […]
Date: September 10th, 2020
At the point on the demand curve at which marginal revenue = 0, the absolute value of the coefficient of the price elasticity of demand is: A) > 1. B) = 1. C) < 1. D) = 0. ANSWER B
Date: September 10th, 2020
Which of the following statements is correct? A) Arc elasticity of demand is the same as the slope of the demand curve. B) Arc elasticity of demand only applies to a nonlinear demand curve. C) Point elasticity of demand is measured at each point along a demand curve. D) Point elasticity of demand is measured […]
Date: September 10th, 2020
In order for “limit pricing” to be effective, the firm practicing such a strategy must be able to charge a price that is: A) lower than the potential entrant’s ATC but greater than the firm’s own ATC. B) greater than the potential entrant’s ATC but lower than the firm’s own ATC. C) lower than the […]
Date: September 10th, 2020
Assume a bottled water company is trying to decide on a new pricing strategy. Sound decision making would require the firm’s managers to consider not only how consumers will respond to the product’s own price, but how they will react to the price for the firm’s product relative to the prices of similar products offered […]
Date: September 10th, 2020
Assuming the inverse demand function for good Z can be written as P = 90 – 3Q, when P = 20, the point price elasticity of demand is equal to (approximately): A) -0.22. B) -0.29. C) -0.67. D) -4.5. ANSWER B
Date: September 10th, 2020
In game theory, the strategy that results in the highest payoff to a player regardless of what the other player decides to do is called the: A) Stackleberg equilibrium. B) equilibrium strategy. C) min-max strategy. D) dominant strategy. ANSWER D
Date: September 10th, 2020
Suppose the price of movies seen at a theater rises from $12 per couple to $20 per couple. The theater manager observes that the rise in price causes attendance at a given movie to fall from 300 persons to 200 persons. What is the arc price elasticity of demand for movies? A) 0.5 B) 0.8 […]
Date: September 10th, 2020
X-inefficiency refers to the situation in which: A) highly competitive firms have less incentive to minimize their costs of production than other firms because the highly competitive firms have almost no chance to earn above-average profits. B) firms are unable to minimize their costs of production because there is no potential for input substitution. C) […]
Date: September 10th, 2020
