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20. Factors that affect the ability of oligopolistic firms
to successfully engage in cooperation include_________________. (Points : 1.25)
a) number and
size distribution of sellers
b) size and
frequency of orders
c) product
heterogeneity
d) a and b
only
e) a, b, and c
Question 21. 21. Joint products are: (Points : 1.25)
a) products
which are technically independent in the production process
b) exemplified
by beef and hide from cattle
c) products
whose production processes are interdependent
d) a and b
e) b and c
Question 22. 22. In _________ price discrimination, the
monopolist charges each consumer the highest price that purchaser is willing to
pay for each unit purchased (provided that this price exceeds the marginal cost
of production). (Points : 1.25)
a)
first-degree
b)
second-degree
Question 23. 23. ___________ is a new product pricing
strategy which results in a high initial product price. This price is reduced
over time as demand at the higher price is satisfied. (Points : 1.25)
a) Prestige
pricing
b) Price
lining
c) Skimming
d) Incremental
pricing
e) None of the
above
Question 24. 24. ____________ is the price at which an
intermediate good or service is transferred from the selling to the buying
division within the same firm. (Points : 1.25)
a) Incremental
price
b) Marginal
price
c) Full-cost
price
d) Transfer
price
e) none of the
above
Question 25. 25. For a monopolist that engages in price
discrimination, when the price elasticity in market 1 is less (in absolute
value) than in market 2, the optimal price in market 1 will exceed the optimal
price in market 2. (Points : 1.25)
a) Ture
b) False
Question 26. 26. To maximize profits, a monopolist that
engages in price discrimination must allocate output in such a way as to make
identical the_________in all markets. (Points : 1.25)
a) ratio of
price to marginal cost
b) ratio of
marginal cost to marginal utility
c) ratio of price to elasticity
d) marginal
revenue
e) none of the
above
Question 27. 27. The segmenting of customers into several
small groups such as household, institutional, commercial, and industrial
users, and establishing a different rate schedule for each group is known as:
(Points : 1.25)
a)
first-degree price discrimination
b) market
penetration
c)
third-degree price discrimination
d)
second-degree price discrimination
e) none of the
above
Question 28. 28. Transfer pricing: (Points : 1.25)
a) is typical
of a centralized firm
b) assumes no external sources available
c) should
maximize a division's profits, rather than the firm's
d) can exist
with or without an external competitive market
e) none of the
above
Question 29. 29. A company sells 20,000 pairs of jeans a
year at an average price of $10. Fixed costs are $60,000 and total variable
costs are $120,000. They estimate that a 10% increase in output would not
affect fixed cost but would reduce average variable costs by 40 cents. Someone
suggests reducing price by 5% to increase sales and project. The price
elasticity of demand (ARC) is -2.
The impact on total revenue would be: (Points : 1.25)
a) a decrease
of $10,000
b) an increase
of $10,000
c) an increase
of $180,000
d) None above
Question 30. 30. Given the information in (29) above. The
change in total costs would be: (Points : 1.25)
a) a decrease
of $3,500
b) an increase
of $ 3,800
c) an increase
of $180,000
d) None above
Question 31. 31. Given the information in (29) above. The
effect on profit would be: (Points : 1.25)
a) an increase
of $42,000
b) a decrease
of $6,200
c) an increase
of 50,000
d) an increase
of $6,200
e) None above
Question 32. 32. An effective ceiling price would cause:
(Points : 1.25)
a) a surplus
in the market
b) a shortage in the market
c) would not
affect the market
d) None above
Question 33. 33. In the electric power industry, residential
customers have relatively________ demands for electricity compared to
industrial users and are generally charged _________ rate. (Points : 1.25)
a) similar:
similar
b) elastic:
lower
c) elastic;
higher
d) inelastic;
lower
e) inelastic;
higher
Question 34. 34. To maximize profit, a monopolist that
engages in price discrimination must allocate output in a way that makes _____
identical in all markets. (Points : 1.25)
a) ratio of
price to marginal cost
b) ratio of
marginal cost to price
c) ratio of
price to elasticity
d) marginal
revenue
e) None above
Question 35. 35. In the short-run a company (pure
competitor) will stop production when: (Points : 1.25)
a) total
revenue is less than total costs
b) price is
less than average variable cost
c) operating
at a loss
d) None above
Question 36. 36. Which of the following is an example of an
oligopolistic market structure? (Points : 1.25)
a) Public
utilities
b) Airlines
c) liquor
retailers
d) wheat
farmers
e) None above
Question 37. 37. If a cartel wishes to maximize profits, the
market share of each participant should be set at a level such that the _____
of all participants is identical. (Points : 1.25)
a) average
total cost
b) average
profit
c) marginal
cost
d) marginal
profit
e) None above
Question 38. 38. Effective collusion generally is more
difficult as the number of oligopolistic firms involved increases (Points :
1.25)
True
False
Question 39. 39. Capital budgeting does not provide for
depreciation (Points : 1.25)
a) True
b) False
Question 40. 40. To determine the benefit from a capital
investment. The stream of future revenues must be discounted to their present
value. (Points : 1.25)
a) True
b) False
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