The kink demand curve faced by an oligopolist is based on the assumption that:
Competitors will follow a price increase but not a price cut
Competitors will follow a price increase as well as a price cut
Competitors will ignore both a price increase and a price cut
Competitors will ignore a price increase but will follow a price cut
Correct Answer :
D. Competitors will ignore a price increase but will follow a price cut
Related Questions
In which case the elasticity shown by the different points of a curve is the same?
A straight line curve
A downward sloping demand curve
A rectangular hyperbola demand curve
None of the above
Under perfect competition, a firm will be in equilibrium if:
MC = MR
MC cuts the MR from below
MC rises when it cuts the MR
All the above three conditions are fulfilled
The cournot model is a model of:
Instable equilibrium
Stable equilibrium
Constant equilibrium
Fluctuating equilibrium
J.R.Hicks was:
Neo-classical economist
Classical economist
Keynesian economist
Post-Keynesian economist
Which of the following is not an explicit cost of production?
Wage of self-employed proprietor
Depreciation on machinery
Returns on owned capital
Cost of raw materials
A profit-maximizing monopolist in two separate markets will:
Charge the same price in both markets
Always charge a higher price in the market where he sells more
Always charge a higher price in the market where he sells less
Adjust his sales in the two markets so that his marginal revenue in each market just equals his aggregate marginal cost
The price consumption curve (PCC) for commodity X is the locus of points of consumer equilibrium resulting when:
The price of only Y is varied
The price of only X is varied
The prices of both Y and X are varied
None of the above
The low cost price leader will charge:
higher prices
zero prices
lower prices
specific prices
In discriminating monopoly (price discrimination), the elasticity of demand of product in two markets are:
Different
Same
Zero
None of the above
The main contribution of Adam Smith is in the field of:
Economics of state
Wealth of Nations
Value and price
Theory of demand
If the consumers expect that the price of computers will decrease in next year then:
Current demand for computers will fall
Current demand for computers will rise
Current demand will change unpredictably
Current supply of computers will rise
To attain maximum profits during short-run a firm should produce the output that will:
Yield maximum total revenue
Minimize marginal cost
Maximize marginal cost
Equate marginal revenue with marginal cost
In the case of a normal goods, the income effect:
Is always equal to the substitution effect
Completely offsets the substitution effect
Partially offsets the substitution effect
Reinforces the substitution effect
Price leadership is associated with:
Collusive oligopoly
Non-collusive oligopoly
Cartel
Perfect competition
The number of sellers in oligopoly are:
Two
Many
Four
Very few
We can find total utility by:
Multiplying the number of unit by its marginal utility
Adding up the marginal utility of all units
Multiplying price by number of units
None of the above
The main objective of the firm is to:
Face losses
Avoid losses
Bear losses
Make economic decisions
When there is decrease in demand the demand curve:
Moves (shifts) towards the axis
Moves (shifts) away from the axis
Remains unchanged
All of the above
Of the following commodities, which has the lowest price-elasticity of demand?
Car
Salt
Tea
House
Price mechanism has also given the name:
Labor theory
Production theory
Laisseze-faire
None of the above
The Cambridge School of Thought refers to the group of English economists who came under the influence of:
Alfred Marshal
J.M.Keynes
Paul A.Samuelson
A.C.Pigou
For a commodity giving large consumers surplus, the demand will be:
Less elastic
More elastic
Unit elastic
Zero elastic
The real income of a consumer is income in terms of:
Goods
Goods and survices
Goods and survices it can purchased
Monetary units
If X and Y are close substitutes, a rise in the price of X will lead to:
Increase in demand for Y
Decrease in demand for Y
Decrease in demand for both X and Y
No change in demand for Y
Who first used the term Quasi-Rent?
David Ricardo
Alfred Marshal
J.S.Mill
Karl Marx
If the demand curve remains unchanged and supply increases, the price will:
Rise
Fall
Remain the same
None of the above
In constant sum game (zero sum game), if there are two parties then:
Both parties make better-off
Both parties make worse-off
Both parties become Neutral
One party can become better off only if another is made worse off
The relationship between AC and MC curves depend upon the behavior of:
AP curves
MP curves
Both of them
None of them
When total revenues equal to total opportunity cost then the firm will earn:
Abnormal profit
Zero profit
Normal profit
Negative profit
By increasing the price of its products above those of its competitors, a perfectly competitive seller:
Can sell more
Reduces its revenues
Can sell nothing
Increases its revenues