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:

Merchandising Transactions

Business activities related to the buying and selling of merchandise, which may involve inventory purchases, sales transactions, and the return of goods.

Journal Entries

Journal entries are the records of financial transactions in the accounting books, marking the initial step in the accounting cycle, detailing debits and credits.

Adjusted Trial Balance

An adjusted trial balance is a listing of all company accounts that will appear on the financial statements after year-end adjusting journal entries have been made.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, finalizing the books for the period.