Holding all else constant, a decrease in the market demand for a product in a co
ID: 1167174 • Letter: H
Question
Holding all else constant, a decrease in the market demand for a product in a competitive market would cause
Ash is the preferred wood to be used in the production of baseball bats. If a company was to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?
The ________ demand curve theory states that oligopolists tend to respond aggressively to the price cuts of rivals, but largely ignore price increases.
The practice of setting prices deliberately below ________ costs in an effort to drive a competitor out of the market is known as predatory pricing.
the average total cost (ATC) curve of the firms to decrease.Explanation / Answer
Holding all else constant, a decrease in the market demand for a product in a competitive market would cause
The marginal revenue (MR) curve of the firms to shift downward.
When the demand decreases holding all other things remains constant, the price and output both decreases. In a competitive market, the price is equal to AR and MR. Hence MR curve shift downwards or MR decreases.
Ash is the preferred wood to be used in the production of baseball bats. If a company was to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created?
control of resources
Single ownership over a resource gives the owner the power to raise the market price of a good over marginal cost without losing customers to competitors.
The ________ demand curve theory states that oligopolists tend to respond aggressively to the price cuts of rivals, but largely ignore price increases.
Kinked
This curve states that when one oligopolist cuts the price, others follow but if one oligopolist increases the price, others ignore. This justifies the feature of price rigidity.
The practice of setting prices deliberately below ________ costs in an effort to drive a competitor out of the market is known as predatory pricing.
average total
Predatory pricing occurs when a firm sells a good or service at a price below average total cost (or very cheaply) with the intention of forcing rival firms out of business.
The marginal revenue (MR) curve of the firms to shift downward.
When the demand decreases holding all other things remains constant, the price and output both decreases. In a competitive market, the price is equal to AR and MR. Hence MR curve shift downwards or MR decreases.
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