Vertical contracts between manufacturers and retailers often aim to
a. Prevent the manufacturers from upstream price discrimination
b. Reward the manufacturer for undertaking the risk inherent in introducing a new product
c. Serve as a signal of the manufacturer's belief of the likely success of his product
d. All of the above
QUESTION 2After running a promotional campaign, the owners of a local shoe store decided to decrease the prices for the shoes sold in their store. One can imply that
a. The promotional expenditures made the demand for their shoes more elastic
b. The promotional expenditures made the demand for their shoes more inelastic
c. The promotional expenditures has no effect on the shoe demand elasticity
d. The owners got it wrong. To cover the promotional expenses, they should have raised the prices.
QUESTION 3All of the following are true for both competition and monopolistic competition in the long run, except one of them. Which is it?
a. P = MC
b. P = AC
c. Economic profits become zero in the long-run
d. The barriers to entry and exit are relatively easy
e. None of the above is an exception
QUESTION 4Vertical contracts between manufacturers and retailers often aim to
a. Prevent the retailers from defeating upstream price discrimination through arbitrage
b. Reward the retailer for undertaking the risk inherent in introducing a new product
c. Serve as a signal of the manufacturer's belief of the likely success of his product
d. All of the above
QUESTION 5All the below choices are examples of promoting a firm's product, except
a. Advertising
b. Pricing
c. Discount coupons
d. End-of-aisle displays
QUESTION 6What is the profit maximization point for a firm in a purely competitive environment?
a. The output where P = MC
b. The output where P < MC
c. The output where P > MC
d. The output where MR = MC
e. The output where AVC < P
QUESTION 7Vertical contracts between manufacturers and retailers often aim to
a. Incentivize the retailers to undertake costly activities, which they otherwise may not realize the full benefits of on their own
b. Reward the manufacturer for undertaking the risk inherent in introducing a new product
c. Serve as a signal of the retailer's belief of the likely success of his product
d. All of the above
QUESTION 8Promotion is one dimension to competition. It represents
a. The designing of a firm's product
b. Firm's product distribution decisions
c. Any expenditure that assist in increasing the demand for a firm's product
d. None of the above
QUESTION 9Long distance telephone service has become a competitive market. The average cost per call is 0.05 a minute, and it's declining. The likely reason for the declining price for long distance service is:
a. Governmental pressure to lower the price
b. Reduced demand for long distance service
c. Entry into this industry pushes prices down
d. Lower price for a barrel of crude oil
e. Increased cost of providing long distance service
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