If a Firm Is in an Antitrust Court Case Being

question 286

Multiple Choice

If a firm is in an antitrust court case being accused of monopolizing a product, the firm would hire an economist to show

• A)the cross-price elasticity of demand between the firm's good and another is negative.
• B)the cross-price elasticity of demand between the firm's good and another is positive.
• C)the price elasticity of demand for the firm's good is highly inelastic.
• D)the income elasticity of the firm's good is inferior.

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Definitions:

Law of Diminishing Returns

Law of Diminishing Returns states that in a production process, adding an additional factor of production, while holding all others constant, will at some point yield lower per-unit returns.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded, and should not influence current or future decisions.

Variable Costs

Costs that change in proportion to the level of production or service activity.

Fixed Costs

Expenses that remain constant regardless of the amount of production, like lease payments or wages.