Assume the Firms Firms Operating in an Oligopolistic Market Experience

question 8

Multiple Choice

Assume the firms firms operating in an oligopolistic market experience a relatively small change in marginal costs.According to the kinked demand curve model this would:

• A)cause a large change in the profit-maximizing level of output.
• B)leave the equilibrium price unchanged.
• C)cause the profit-maximizing level of output to change by the same amount and in the same direction.
• D)cause the profit-maximizing price to change by the same amount but in the opposite direction.

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Definitions:

Accounts Payable

A bookkeeping record indicating a business's need to settle a short-term financial debt owed to its lenders or vendors.

Merchandise Inventory

Goods that a retail or wholesale company intends to sell to customers for a profit.

Sales Invoice

A document issued by a seller to a buyer, listing items or services supplied and specifying the amount due for payment.

Purchase Order

A formal document sent from a buyer to a supplier to authorize the purchase of products or services under specified terms and conditions.