According to the kinked demand theory, when one firm raises its price, other firms will:
a. also raise their prices.
b. refuse to follow.
c. increase their advertising expenditures.
d. exit the industry.
QUESTION 2A farm is able to produce 5,000 bushels of peaches per season on 100 acres. Assume it adds one more acre and is able to produce 6,000 bushels per season. The marginal product of the additional acre of land for this farm is:
a. 6,000 bushels per acre per year.
b. 5,000 bushels per acre per year.
c. 1,000 bushels per acre per year.
d. 11,000 bushels per acre per year.
QUESTION 3By a leading economic indicator, economists mean:
a. an indicator of future economic activity.
b. an indicator that reflects economic fluctuations as they occur.
c. a highly accurate indicator that is easily measured.
d. an indicator that predicts the level of inflation in an economy.
e. any variable that follows changes in economic activity.
QUESTION 4The kinked demand theory attempts to explain why an oligopolistic firm:
a. has relatively large advertising expenditures.
b. fails to invest in research and development (R and D).
c. infrequently changes its price.
d. engages in excessive brand proliferation.
QUESTION 5If the units of variable input in a production process are 1, 2, 3, 4, and 5, and the corresponding total outputs are 30, 34, 37, 39, and 40, respectively. The marginal product of the fourth unit is:
a. 2.
b. 1.
c. 37.
d. 39.
Quick Reply
