Which of the following statements concerning the long-run average cost (LRAC) curve is correct? A) The LRAC curve represents the least-cost input combination of inputs for producing each level of output. B) The LRAC curve is derived from a series of short-run marginal cost curves. C) The short-run cost curve at the minimum point of […]
The success of a predatory pricing strategy in an oligopolistic market depends on all of the following except: A) the number of firms operating in the industry prior to enactment of the policy. B) how far the predatory price is below cost. C) the period of time for which the predatory price is in effect. […]
All else constant, as the barriers to entry into a particular market increase, so will the ability of firms in that market to earn above-average profits. Indicate whether the statement is true or false ANSWER TRUE
An increase in the amount of competition with other firms that employ “best practices” would be likely to cause a particular firm’s labor productivity to: A) increase B) stay the same. C) decrease. D) cannot be determined without additional information. ANSWER A
Which of the following is an example of strategic entry deterrence? A) Marginal cost pricing. B) Limit pricing. C) Price leadership. D) Mark-up pricing. ANSWER B
If we ranked the four market structures on the basis of degree of competition, perfect competition and monopolistic competition would be at opposite ends of the spectrum. Indicate whether the statement is true or false ANSWER FALSE
The fact that supermarkets, a land-intensive form of organization, have become the dominant form of grocery store in the United States suggests that: A) there is little or no potential for input substitution in the grocery store business. B) transportation costs are insignificant in the grocery store business. C) land is a relatively inexpensive input […]
Which of the following is least likely to limit the ability of a firm to minimize production costs? A) Resistance by labor. B) The fact that the firm is a nonprofit organization. C) An increase in the amount of competition faced by the firm. D) Legislated input combinations for firms in particular industries, e.g, health […]
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 […]
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 […]
