Question 1. (Points: 2) If a firm finds itself operating in Stage I, it implies that

03 Jun Question 1. (Points: 2) If a firm finds itself operating in Stage I, it implies that

Question
1.
(Points: 2)
If a firm finds itself operating in Stage I, it implies that

a. variable inputs are extremely expensive.

b. it underinvested in fixed capacity.

c. it overinvested in fixed capacity.

d. fixed inputs are extremely expensive.

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2.
(Points: 1)
Which of the following distinctions helps to explain the difference between relevant and irrelevant cost?

a. variable cost vs. incremental cost

b. sunk cost vs. fixed cost

c. historical cost vs. replacement cost

d. accounting cost vs. direct cost

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3.
(Points: 1)
The pricing of a product at each stage of production as the product moves through several stages is called

a. transfer pricing.

b. cost plus pricing.

c. penetration pricing.

d. monopolistic pricing.

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4.
(Points: 1)
All of the following are conditions which are favorable to the formation of cartels except

a. the existence of a small number of firms.

b. geographic proximity of firms.

c. homogeneity of the product.

d. easy entry into the industry.

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5.
(Points: 2)
The result for the seller of being able to practice price discrimination will be

a. lower quantity sold.

b. higher profits.

c. cost minimization.

d. lower demand elasticity.

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6.
(Points: 2)
When a firm prices its goods below the marginal cost to drive away competitors, it is referred as

a. limit pricing.

b. price skimming.

c. predatory pricing.

d. penetration pricing.

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7.
(Points: 1)
Other things remaining the same, an increase in the price of butter can be expected to

a. increase margarine sales.

b. increase butter sales.

c. decrease margarine sales.

d. None of the above

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8.
(Points: 2)
In which of these markets would the firms be facing the least elastic demand curve?

a. oligopoly

b. perfect competition

c. pure monopoly

d. monopolistic competition

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9.
(Points: 2)
Mutual interdependence occurs when

a. the actions of one firm in an industry are easily recognized and perhaps copied by others.

b. monopolists recognize that they must face eventual competition in the long run.

c. all firms in an industry are affected by the same macro economic conditions, such as a recession, inflation, interest rates, exchange rates, etc.

d. the actions of firms are independent of each other.

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10.
(Points: 1)
Mutual interdependence means that

a. all firms are price takers.

b. all firms collaborate to establish one price.

c. each firm sets its own price based on its anticipated reaction by its competitors.

d. all firms are free to enter or leave the market.

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11.
(Points: 2)
In general, there is a(n) ________ relationship between the height/strength of the barriers and the number of firms in an industry.

a. inverse

b. random

c. constant

d. direct

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12.
(Points: 1)
When a company is faced by a kinked demand curve, the marginal revenue curve

a. will be upward sloping.