If more foreign auto plants relocate to the United States, we would expect
A) the U.S. supply curve for automobiles to shift to the right.
B) the U.S. supply curve for automobiles would shift to the left.
C) that the U.S. auto market would not respond.
D) that U.S. auto demand might change, but U.S. auto supply would remain static.
A
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The key disadvantage of the kinked-demand model is that it:
A) explains why firms may collude, but it does not explain how they interact. B) does not explain why prices may be rigid in an oligopoly. C) requires the assumptions of perfect competition. D) only holds under price leadership.
If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal
A) zero. B) the rate of output where price equals marginal cost. C) the rate of output associated with the break-even point. D) the rate of output where marginal revenue equals average fixed costs.