Which of the following is a plausible reason that restaurants offer “Senior Citizen Discounts”? A) Senior citizens tend to have relatively more elastic demands for restaurant meals than other consumer groups. B) Senior citizens tend to have relatively more inelastic demands for restaurant meals. than other consumer groups. C) Senior citizens are not very sensitive […]
The assumption that rival firms will match a firm’s price decreases but not its price increases is a basic feature of: A) model of limit pricing. B) the kinked demand curve model. C) the predatory pricing model. D) cartel theory. ANSWER B
Which of the following would have the least amount of influence on a manager’s choice of which inputs to employ in a production process? A) The price of a competitor’s output. B) The technology of the production process. C) The marginal productivity of the inputs that can be used in the production process. D) The […]
Sound business decision making requires a firm understanding of both microeconomic and macroeconomic concepts. Indicate whether the statement is true or false ANSWER TRUE
Suppose an oligopolistic firm raises the price of its output. Demand for the firm’s output will be relatively price ________ if the other dominant firms in the market ________. A) elastic; do not raise price B) unit elastic; do not raise price C) inelastic; also raise price D) cannot be determined ANSWER A
According to one study, the price elasticity of demand for restaurant meals is -2.27. This implies that if restaurants want to increase their total revenues they should: A) increase prices. B) decrease prices. C) leave prices unchanged. D) cannot be determined with the information given. ANSWER B
Assume a firm is currently employing 20 units of capital and 100 units of labor in its production process. Assume also that the marginal product of the 20th unit of capital is 40 units of output, the marginal product of the 100th unit of labor is 10 units of output and the per unit prices […]
Which of the following best describes the basic characteristics of noncooperative oligopoly models? A) Managers make decisions based on the strategy they think their rivals will pursue. B) Managers attempt to deliberately mislead their rivals regarding the strategy they will pursue. C) When making decisions, managers basically ignore the mutual interdependence that exists among rivals. […]
The rate of inflation measures the change in the relative prices of the goods and services produced in the macroeconomy over a specified period of time. Indicate whether the statement is true or false ANSWER FALSE
A labor-intensive method of production is one that: A) requires employees to work harder than they would in other occupations. B) relies exclusively on labor. C) relies on large quantities of labor and smaller quantities of capital equipment. D) combines a small but sophisticated labor force with a large amount of capital. ANSWER C
