A "kinked" demand curve reflects a tendency on the part of an oligopolist to:
a. follow price increases but not price reductions.
b. following price reductions but not price increases.
c. be unconcerned with rivals' behavior.
d. None of these.
b
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As the real interest rate in the domestic loanable funds market increases,
a. the cost of purchasing goods and services during the current period will decrease. b. the net inflow of capital from abroad will increase. c. the inflationary premium will rise and the money rate of interest will decline. d. a trade surplus will occur.
A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which
A) must be positive. B) must be either zero or positive. C) can be positive, negative, or zero. D) exist at the point at which price equals total cost.