If a Firm Is Producing at the Kink in Its

question 132

Multiple Choice

If a firm is producing at the kink in its demand curve and it decides to increase its price,according to the kinked demand model

• A)It will gain market share.
• B)It will lose market share to the firms that do not follow the price increase.
• C)Its market share will not be affected.
• D)It will not gain market share but will definitely increase profits.

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Definitions:

Return-On-Equity Ratio

A financial ratio that measures a company's ability to generate profits from its shareholders' equity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a profit or loss.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholder's equity at a specific point in time.

Investing Activities

Investing activities involve the purchase and sale of long-term assets and other investments, not considered as cash equivalents by a company.