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.Management Sciences
Category: Profit Maximizing Under Perfect Competition And Monopoly
Engineers for the All-Terrain Bike Company have determined that a 15% increase in all inputs will cause a 15% increase in output Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases?
A. average costs to remain constant
B. average costs to decrease
C. average costs to increase
D. marginal costs to increase
When ________ substitutes exist, a monopolist has ________ power to raise price?
A. more; more
B. fewer; less
C. more; less
D. no; infinite
Maximum profit can be shown on a diagram using ?
A. the MR and MC curves
B. the AC and AR curves
C. the AC and MC curves
D. the MR and AR curves
In monopolistic competition firms achieve some degree of market power ?
A. by producing differentiated products
B. because of barriers to exit from the industry
C. by virtue of size alone
D. because of barriers to entry into the industry
The cosmetics industry is not considered by economists to be a good example of perfect competition because ?
A. there are many EU and government health controls on cosmetic products
B. there are a very large number of firms in the industry
C. firms spend a large amount of money on advertising
D. profit margins are very high for both producers and retailers
The kinked demand curve model of oligopoly assumes the elasticity of demand ?
A. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease
B. is perfectly elastic if price increases and perfectly inelastic if price decreases
C. is constant regardless of whether price increase of decrease.
D. in response to a price increases is more elastic than the elasticity of demand in response to a price decrease
A major weakness of the kinked demand curve model of oligopoly is that ?
A. it assumes that firms believe that their rivals will not respond to any price change they initiate
B. it fails to explain how a firm arrived at its price and output decision initially
C. The model cannot be tested empirically.
D. Real-world pricing strategies are more simple than those assumed in this model
In contestable markets, large oligopolistic firms, end up behaving like ?
A. perfectly competitive firms
B. a cartel
C. a monopoly
D. monopolistically competitive firms.
A market is defined as perfectly contestable if ?
A. entry to it and exit from it are both costless
B. entry to it and exit from it are both costly
C. entry to it costless, but exit from it is costless
D. entry to it is costly, but exit from it is costless
In contestable markets large oligopolistic firms end up behaving like ?
A. monopolistically competitive firms
B. a cartel
C. perfectly competitive firms
D. a monopoly.
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