The kinked-demand curve model of oligopoly:
A. assumes a firm's rivals will ignore any price change it may initiate.
B. suggests a firm's rivals will ignore a price cut but match a price increase.
C. assumes a firm's rivals will match any price change it may initiate.
D. suggests small changes in unit costs will have no effect on equilibrium price and output.
Answer: D
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Indicate whether the statement is true or false
The primary reason why individuals are willing to pay entrepreneurs to organize production is
a. that they have to guarantee that the entrepreneur will make a profit b. they avoid taxation when activities are organized by someone else c. that it is better for businesses to pay taxes than individuals d. that it reduces transaction costs e. that entrepreneurs are more vulnerable in the case of the owner