The Firm May Not Be Able to Pass Through Changes

question 98

Multiple Choice

The firm may not be able to pass through changes in the exchange rate

• A)in markets with low product differentiation.
• B)in markets with high price elasticities.
• C)in markets with low product differentiation or in markets with high price elasticities.
• D)none of the options

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Definitions:

Kinked Demand

A demand curve that has a distinct bend or "kink" at a certain price level, reflecting different elasticity above and below that price.

Marginal Cost

The increase in cost resulting from the production of an extra unit of a good or service.

Output Level

The total amount of goods or services produced by a business or economy during a specific period.

Profit Maximizing

The process by which a company determines the price and output level that generates the maximum profit.